GHCL Q2 profit rose 19% as EBITDA margin fell sequentially

GHCL reported adjusted profit after tax of Rs 127 crore in Q2 FY27, up 19% from Rs 107 crore a year earlier, as revenue increased 11% to Rs 821 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) margin, however, fell 450 basis points sequentially to 24.7% as lower-cost inventory benefits tapered and energy and raw-material costs rose.

Why did GHCL's Q2 FY27 profit rise 19%?

GHCL's adjusted profit after tax rose 19% year on year to Rs 127 crore in Q2 FY27 from Rs 107 crore in Q2 FY26. Revenue increased to Rs 821 crore from Rs 739 crore, while EBITDA rose 16% to Rs 202 crore from Rs 175 crore. Earnings before interest and tax increased 18% to Rs 174 crore, and profit before tax before exceptional items rose 19% to Rs 172 crore.

The year-on-year increase reflected an Rs 82 crore rise in revenue against an Rs 55 crore increase in operating expenses. GHCL said realisations improved marginally from a year earlier through partial pass-through of higher raw-material costs, although the quarter also had typical monsoon-led seasonal softness. EBITDA margin was 24.7%, up 100 basis points from 23.7% in Q2 FY26; one basis point equals one-hundredth of a percentage point.

How did GHCL's margin change from Q1 FY27 to Q2 FY27?

GHCL's EBITDA margin declined to 24.7% in Q2 FY27 from 29.1% in Q1 FY27, a sequential fall of 450 basis points. EBITDA declined 13% to Rs 202 crore from Rs 233 crore even as revenue rose 3% to Rs 821 crore from Rs 798 crore. Operating expenses increased 9% to Rs 619 crore from Rs 565 crore, exceeding the quarterly revenue increase.

GHCL attributed the moderation to the tapering of lower-cost inventory benefits and higher energy and raw-material costs amid geopolitical volatility. Management said global soda ash oversupply and steady import pressure kept near-term realisations soft, and it expects that condition to persist over the next few quarters. It cited low-cost positioning, operating efficiencies and structural cost management as support mechanisms in Q2 FY27.

The sequential profit comparison also requires adjustment for a Q1 FY27 exceptional gain. Reported profit after tax in Q1 FY27 was Rs 191 crore, including an Rs 54 crore pre-tax gain from a one-time settlement by the ESOS trust, equal to Rs 40 crore net of taxes. On an adjusted basis, Q2 FY27 profit after tax of Rs 127 crore was 16% below Q1 FY27 adjusted profit after tax of Rs 151 crore.

What did GHCL deliver in the first half of FY27?

GHCL delivered H1 FY27 revenue of Rs 1,619 crore, up 4% from Rs 1,562 crore in H1 FY26, while adjusted profit after tax rose 10% to Rs 278 crore from Rs 252 crore. EBITDA increased 9% to Rs 435 crore from Rs 399 crore. First-half EBITDA margin reached 26.9%, 130 basis points above 25.6% a year earlier.

The first-half outcome combines contrasting quarterly movements. Q1 FY27 revenue was Rs 798 crore and EBITDA was Rs 233 crore, producing a 29.1% margin, while Q2 revenue rose to Rs 821 crore but EBITDA declined to Rs 202 crore and margin moved to 24.7%. GHCL reported H1 FY27 cash profit of Rs 334 crore, up 9% year on year.

How did GHCL deploy cash and manage its balance sheet?

GHCL generated Rs 360 crore of cash inflow in H1 FY27, comprising Rs 353 crore of cash operating profit and Rs 7 crore of employee stock option proceeds. It deployed Rs 408 crore, including Rs 217 crore for working capital and other uses, Rs 110 crore in dividends, Rs 68 crore of growth capital expenditure and Rs 13 crore of loan repayment. Net cash used for cash and treasury was Rs 48 crore.

At September 2026, GHCL reported gross debt of Rs 49 crore and net cash of Rs 1,072 crore, with gross debt-to-equity of 0.01 times. Borrowings fell from Rs 62 crore in March 2026, while cash, bank balances and investments decreased from Rs 1,121 crore to Rs 1,072 crore. Inventories rose from Rs 597 crore to Rs 636 crore and trade receivables increased from Rs 173 crore to Rs 222 crore.

Net fixed assets increased to Rs 1,986 crore in September 2026 from Rs 1,821 crore in March 2026, while capital work in progress declined to Rs 274 crore from Rs 450 crore. Total assets were Rs 4,325 crore, compared with Rs 4,300 crore in March 2026. GHCL disclosed pre-tax return on capital employed of about 17% and return on equity of about 15% for the trailing 12 months to September 2026.

What growth projects has GHCL commissioned or planned?

GHCL commenced commercial Vacuum Salt production in August 2026 with annual capacity of 1.7 lakh metric tonnes and capital expenditure of Rs 195 crore. The product uses waste heat recovered from the existing soda ash plant. Management said commercial Bromine production began after the Q2 FY27 close, in October 2026, with annual capacity of 2,400 metric tonnes and capital expenditure of Rs 120 crore.

The growth pipeline includes a 2.5 lakh metric tonne salt-capacity expansion requiring Rs 105 crore of capital expenditure, lifting salt capacity from 6.0 lakh metric tonnes per annum to 8.5 lakh metric tonnes per annum. GHCL is also progressing a new salt works at Zara Zumara with annual capacity of 17 lakh metric tonnes and capital expenditure of Rs 350 crore. The stated purpose is to deepen backward integration.

GHCL also plans to start an own rail siding with handling capacity of 12 lakh metric tonnes and capital expenditure of Rs 88 crore. Management said the project is intended to reduce dependence on trucks and lower logistics costs. Its stated priorities include optimising Vacuum Salt and Bromine capacity while advancing long-term greenfield expansion plans.

Conclusion

GHCL's Q2 FY27 result combined year-on-year earnings growth with a sequential margin setback. Revenue increased 11%, EBITDA rose 16% and adjusted profit after tax grew 19%, but EBITDA margin declined to 24.7% from 29.1% in Q1 FY27 as inventory-cost benefits ended and energy and raw-material costs increased.

The next developments to watch are management's optimisation of the 1.7 lakh metric tonne Vacuum Salt capacity commissioned in August 2026 and the 2,400 metric tonne Bromine capacity started in October 2026. Progress on the 2.5 lakh metric tonne salt expansion, the 17 lakh metric tonne Zara Zumara salt works and the 12 lakh metric tonne rail siding will indicate execution of GHCL's disclosed diversification, backward-integration and logistics plans.