Harsha Engineers Q2 margin reaches 18.6% as PAT rises 24%

Harsha Engineers reported an EBITDA margin of 18.6% in Q2 FY27, up from 16.9% in Q2 FY26, as profit after tax rose about 24% year on year to Rs 45.03 crore on revenue from operations of Rs 440.09 crore. The margin was also above 15.9% in Q1 FY27.

What drove Harsha Engineers' Q2 FY27 profit growth?

Harsha Engineers' Q2 FY27 profit growth was led by EBITDA rising faster than revenue. Consolidated EBITDA increased about 28% year on year to Rs 81.85 crore from Rs 63.96 crore, while revenue from operations grew 16.3% to Rs 440.09 crore from Rs 378.34 crore. That difference increased EBITDA margin by 1.7 percentage points to 18.6%.

Profit after tax, or PAT, increased to Rs 45.03 crore from Rs 36.44 crore in Q2 FY26, while PAT margin rose to 10.2% from 9.6%. Profit before tax grew to Rs 61.47 crore from Rs 49.57 crore, and tax expense increased to Rs 16.44 crore from Rs 13.13 crore.

Harsha Engineers defines EBITDA as profit or loss before taxation plus depreciation and amortisation plus finance cost. Basic earnings per share increased to rupees 4.95 in Q2 FY27 from rupees 4.00 in Q2 FY26, while diluted earnings per share was rupees 4.94.

How did Harsha Engineers' Q2 FY27 results compare with Q1 FY27?

Harsha Engineers improved earnings sequentially despite a 3.8% decline in revenue from operations from Rs 457.43 crore in Q1 FY27 to Rs 440.09 crore in Q2 FY27. EBITDA rose by Rs 9.24 crore from Rs 72.61 crore, lifting the margin by 2.7 percentage points from 15.9% to 18.6%.

PAT increased by Rs 7.65 crore from Rs 37.38 crore in Q1 FY27 to Rs 45.03 crore in Q2 FY27. PAT margin rose by 2.0 percentage points from 8.2% to 10.2%, while profit before tax increased from Rs 53.00 crore to Rs 61.47 crore.

Total revenue, including other income, was Rs 447.05 crore in Q2 FY27, compared with Rs 462.56 crore in Q1 FY27 and Rs 388.65 crore in Q2 FY26. Other income was Rs 6.96 crore in Q2 FY27, up from Rs 5.13 crore sequentially but below Rs 10.31 crore a year earlier.

Harsha Engineers said the quarter-on-quarter revenue decline was largely attributable to lower solar-business sales and lower sales at international subsidiaries. Solar engineering, procurement and construction, or EPC, and operations and maintenance, or O&M, revenue fell to Rs 11.92 crore in Q2 FY27 from Rs 36.35 crore in Q1 FY27 and Rs 15.22 crore in Q2 FY26.

Which businesses supported Harsha Engineers' Q2 earnings?

Harsha Engineers' Engineering & Others consolidated business supplied Rs 428.17 crore of Q2 FY27 revenue and Rs 81.12 crore of EBITDA. Revenue increased from Rs 363.12 crore in Q2 FY26 and Rs 421.08 crore in Q1 FY27, while EBITDA rose from Rs 62.96 crore and Rs 69.79 crore, respectively.

Engineering & Others India reported Q2 FY27 revenue of Rs 329.97 crore, up from Rs 265.94 crore a year earlier and Rs 309.96 crore in Q1 FY27. Its EBITDA rose to Rs 78.32 crore from Rs 58.81 crore in Q2 FY26 and Rs 69.50 crore in Q1 FY27.

Management attributed the year-on-year and quarter-on-quarter improvement in India engineering EBITDA and PAT margins to higher revenue, raw-material pass-through and reduced losses at wholly owned subsidiary Harsha Advantek. Harsha Advantek reported a loss of Rs 3 crore in Q2 FY27, and management expects it to become PAT-positive in H2 FY27 on expected sales growth.

Bushings sales were Rs 42 crore in Q2 FY27, up 42.5% year on year, while stampings sales were Rs 23 crore, up 109%. Large-size cages generated Rs 14 crore of sales, and Japan-based customers accounted for Rs 24 crore, about 30% above the year-earlier quarter.

What costs and overseas operations affected Harsha Engineers' Q2 results?

Harsha Engineers recorded cost of goods sold of Rs 212.68 crore in Q2 FY27, compared with Rs 193.07 crore in Q2 FY26 and Rs 240.06 crore in Q1 FY27. The Q2 figure comprised Rs 233.94 crore of material consumed, offset by a Rs 21.26 crore reduction arising from changes in finished-goods and work-in-progress inventories.

Employee-benefit expense rose to Rs 60.70 crore in Q2 FY27 from Rs 52.71 crore a year earlier, while other expenses increased to Rs 91.95 crore from Rs 79.05 crore. Finance costs were Rs 6.14 crore against Rs 3.05 crore in Q2 FY26, and depreciation and amortisation increased to Rs 14.24 crore from Rs 11.34 crore.

Other income of Rs 6.96 crore included Rs 3.86 crore of interest income and Rs 2.78 crore of fair-value gains on investments measured at fair value through profit or loss. The company recorded a foreign-exchange loss of Rs 34 lakh in Q2 FY27, compared with a gain of Rs 3.70 crore in Q2 FY26.

Harsha Romania reported negative EBITDA and PAT in Q2 and H1 FY27, while Harsha China partly offset that performance, management said. The combined net loss of the foreign subsidiaries was around Rs 1.70 crore in Q2 FY27 and around Rs 5 crore in H1 FY27.

Conclusion

Harsha Engineers converted 16.3% year-on-year revenue growth into faster earnings growth in Q2 FY27, with EBITDA increasing about 28% to Rs 81.85 crore and PAT increasing about 24% to Rs 45.03 crore. The resulting EBITDA margin of 18.6% exceeded both the 16.9% reported a year earlier and the 15.9% reported in Q1 FY27.

Next, management expects Harsha Advantek to become PAT-positive in H2 FY27 and is targeting a low-single-digit combined full-year loss for foreign subsidiaries. Harsha Engineers also said it was on track for approximately 30% full-year bushing-sales growth, while Harsha Advantek and Harsha China brownfield projects remained on track after consolidated capital expenditure of Rs 72 crore in H1 FY27.