Hi-Tech Gears Q2 FY27 PAT rises 78% as margins improve

The Hi-Tech Gears reported consolidated Q2 FY27 profit after tax of Rs 10.7 crore, up 78.3% year on year, as operational revenue increased 18.4% to Rs 285 crore and EBITDA margin reached 11.75%. The quarterly PAT margin rose 125 basis points to 3.75%, according to the presentation.

How did Hi-Tech Gears perform in Q2 FY27?

Hi-Tech Gears delivered consolidated operational revenue of Rs 285 crore in Q2 FY27, compared with Rs 240.7 crore in Q2 FY26 and Rs 237.7 crore in Q1 FY27. This represented growth of 18.4% year on year and 19.9% quarter on quarter, with the presentation reporting revenue growth in both the India and North America businesses.

Earnings before interest, tax, depreciation and amortisation, or EBITDA, reached Rs 33.5 crore, up 20.5% from Rs 27.8 crore a year earlier and 27.4% from Rs 26.3 crore in Q1 FY27. EBITDA margin rose to 11.75% from 11.55% in Q2 FY26 and 11.06% in Q1 FY27, increases of 20 basis points and 69 basis points, respectively. A basis point is one-hundredth of a percentage point.

Profit before tax, or PBT, increased 57.3% year on year to Rs 15.1 crore, while tax expense rose to Rs 4.4 crore from Rs 3.6 crore. PAT rose faster than revenue, reaching Rs 10.7 crore from Rs 6 crore in Q2 FY26 and Rs 4.8 crore in Q1 FY27. Diluted earnings per share increased to Rs 5.68 from Rs 3.19 a year earlier.

What drove Hi-Tech Gears' revenue and margin movement?

Hi-Tech Gears attributed Q2 FY27 revenue growth primarily to volume growth across all customer segments and called it the third consecutive quarter of sequential and year-on-year revenue growth. The India business said domestic demand remained intact through H1 FY27, with premium motorcycle and scooter demand healthy across electric-vehicle and internal-combustion-engine segments.

The India operations remain in a consolidation phase focused on machine throughput and labour productivity, with upfront investment in machine refurbishment and labour productivity expected to produce benefits with a natural lag. Standalone operational revenue increased 21.0% year on year to Rs 210.6 crore in Q2 FY27, while standalone EBITDA rose 24.9% to Rs 24.6 crore.

Cost inflation continued to affect conversion costs through higher prices for piped natural gas, liquefied petroleum gas, industrial diesel and cutting-tool consumables, while a government-mandated minimum-wage revision added to manpower costs. Despite those factors, standalone EBITDA margin increased to 11.68% in Q2 FY27 from 11.32% in Q2 FY26 and 10.76% in Q1 FY27.

How does Q2 FY27 compare with Hi-Tech Gears' recent results?

Hi-Tech Gears' Q2 FY27 EBITDA margin of 11.75% was above the 11.13% reported for FY26, while H1 FY27 consolidated revenue reached Rs 522.7 crore and EBITDA was Rs 59.9 crore. The H1 FY27 EBITDA margin was 11.46%, above FY26 but below the 14.66% reported in FY25.

The comparison with FY24 requires adjustment for a disclosed one-time item. Consolidated PAT was Rs 114.3 crore in FY24, including one-time income of Rs 77.2 crore in the overseas subsidiary in Q2 FY24; PAT then measured Rs 40.4 crore in FY25, Rs 21 crore in FY26 and Rs 15.5 crore in H1 FY27.

Below the EBITDA line, Q2 FY27 finance costs were Rs 3.8 crore, compared with Rs 3.9 crore in Q1 FY27 and Rs 3.6 crore in Q2 FY26. Other income was Rs 2.9 crore, versus Rs 1.3 crore sequentially and Rs 2.4 crore a year earlier, while depreciation and amortisation was Rs 17.5 crore against Rs 17.3 crore in Q1 FY27.

What new business could support Hi-Tech Gears' revenue?

Hi-Tech Gears reported about Rs 117.2 crore of annualised new-business wins in FY25-26, compared with about Rs 80.3 crore across FY23-25. The FY25-26 wins included Rs 86 crore from current customers and Rs 31.2 crore from new customers, associated with a new customer and a new platform.

Management said the average ramp-up time to peak revenue is about two to three years after start of production, and said new programmes are being launched with limited balancing capital expenditure. The presentation identified a presence in motorcycles above 350 cubic centimetres, entry into the Indian passenger-car sport-utility-vehicle segment, and consolidation in global passenger cars.

In India, Hi-Tech Gears received a letter of intent from a new customer described as a market leader in premium motorcycles, and it has active requests for quotation in two-wheeler and passenger-car segments. In North America, business won in Q2 FY26 with two existing customers was progressing through samples for Production Part Approval Process approval, while North American revenue increased both sequentially and year on year in Q2 FY27.

What does Hi-Tech Gears' H1 FY27 balance sheet show?

Hi-Tech Gears reported total consolidated assets of Rs 854 crore at H1 FY27, compared with Rs 839.3 crore at FY26, while equity increased to Rs 529.8 crore from Rs 522.6 crore. Non-current assets declined to Rs 444.4 crore from Rs 457.2 crore, whereas current assets increased to Rs 409.6 crore from Rs 382.1 crore.

Current borrowings were Rs 38.9 crore at H1 FY27, down from Rs 53.4 crore at FY26, while non-current borrowings were Rs 7.1 crore versus Rs 7.4 crore. Inventories rose to Rs 148.9 crore from Rs 140.8 crore, and trade payables increased to Rs 120.7 crore from Rs 101.1 crore alongside H1 FY27 revenue of Rs 522.7 crore.

Conclusion

Hi-Tech Gears' Q2 FY27 result combined 18.4% consolidated revenue growth with a 78.3% increase in PAT, as EBITDA margin rose both year on year and sequentially. The result also placed the 11.75% Q2 EBITDA margin above the 11.13% consolidated margin reported for FY26, although H1 FY27 remained below FY25's 14.66% level.

The next disclosed items to watch are the timing of benefits from machine refurbishment and labour-productivity investment, the effect of energy and wage inflation on conversion costs, and the two-to-three-year ramp-up of FY25-26 annualised new-business wins of about Rs 117.2 crore. Management also identified active requests for quotation in India and North America without disclosing their value or conversion timetable.