HPL Q2 FY27 Revenue Rose 40% but Gross Margin Fell 799 Bps

HPL Electric & Power Ltd grew Q2 FY27 revenue from operations 40.02% to Rs 608.31 crore, but gross margin fell 799 basis points to 28.57% and profit after tax increased only 4.68% to Rs 23.40 crore. Cost of goods sold rose 57.65%, outpacing revenue growth and limiting profit conversion.

Why did HPL's Q2 FY27 profit grow more slowly than revenue?

HPL's Q2 FY27 profit grew more slowly because cost of goods sold increased 57.65% to Rs 434.52 crore, compared with 40.02% revenue growth to Rs 608.31 crore. Gross profit consequently increased 9.42% to Rs 173.79 crore from Rs 158.83 crore in Q2 FY26, while profit after tax rose Rs 1.04 crore from Rs 22.36 crore.

Gross margin declined to 28.57% in Q2 FY27 from 36.56% in Q2 FY26, a reduction of 799 basis points. A basis point is one-hundredth of a percentage point. Employee expenses increased 12.85% to Rs 61.94 crore and other expenses rose 6.29% to Rs 40.43 crore, while the largest cost increase was in cost of goods sold.

HPL reported EBIDTA of Rs 71.42 crore in Q2 FY27, up 8.37% from Rs 65.90 crore, but the associated margin fell to 11.74% from 15.17%, a 343-basis-point reduction. Below that line, depreciation increased 47.62% to Rs 18.71 crore, while finance cost declined 4.53% to Rs 22.50 crore.

Profit before tax rose 2.95% to Rs 31.39 crore in Q2 FY27 from Rs 30.49 crore, and its margin declined to 5.2% from 7.0%. Profit-after-tax margin similarly fell 130 basis points to 3.85%, even as earnings per share increased 5.20% to Rs 3.64 from Rs 3.46.

Which HPL segment changed the Q2 FY27 revenue mix?

Consumer, Industrial & Services changed HPL's Q2 FY27 revenue mix by growing 64.42% to Rs 337.46 crore and accounting for 55% of revenue, compared with 47% in Q2 FY26. Metering, Systems & Services increased 18.17% to Rs 270.85 crore, reducing its revenue share to 45% from 53% a year earlier.

The faster-growing Consumer, Industrial & Services segment reported a lower earnings before interest and tax, or EBIT, margin of 8.90% in Q2 FY27, versus 12.28% for Metering, Systems & Services. Consumer, Industrial & Services EBIT margin fell from 10.98% in Q2 FY26, while the Metering, Systems & Services margin declined from 17.52%.

Management attributed the segment-margin movement to input-cost volatility in metals and industrial plastics amid geopolitical and commodity-market conditions. It said pricing actions initiated in H1 FY27 were being extended across Wires & Cables, Lighting and Switchgear, with benefits expected to flow progressively from H2 FY27.

Within Consumer, Industrial & Services, Wires & Cables revenue rose 159.46% year on year to Rs 177.99 crore in Q2 FY27. Lighting grew 59.4% and Domestic Switchgear grew 43.2%, while the presentation listed Industrial Switchgear growth of 29.2% quarter on quarter against a high Q2 FY26 base.

Did HPL's margin pressure continue in H1 FY27?

Yes, HPL's H1 FY27 revenue from operations rose 37.44% to Rs 1,123.55 crore, while profit after tax increased 3.08% to Rs 42.10 crore. Cost of goods sold rose 54.70% to Rs 793.61 crore, limiting gross-profit growth to 8.36% and Rs 329.94 crore.

H1 FY27 gross margin fell 788 basis points to 29.37% from 37.25% in H1 FY26. EBIDTA increased 8.64% to Rs 134.60 crore, but its margin declined 318 basis points to 11.98%, broadly matching the Q2 pattern in which revenue growth was much faster than operating-profit growth.

H1 FY27 profit before tax increased 1.90% to Rs 56.56 crore from Rs 55.51 crore. Depreciation rose 51.88% to Rs 36.80 crore, finance cost fell 3.45% to Rs 44.58 crore, and other income increased 65.87% to Rs 3.34 crore.

What should investors watch after HPL's Q2 FY27?

The key disclosed issue to watch is whether H1 FY27 pricing actions improve margins progressively from H2 FY27 across Wires & Cables, Lighting and Switchgear. Management has not quantified the price changes or provided a margin target, while Consumer, Industrial & Services EBIT margin was 8.67% in H1 FY27 versus 11.11% in H1 FY26.

Metering, Systems & Services provides a separate revenue-visibility measure through an order book above Rs 2,700 crore as of 2 November 2026. HPL said about 96% of that order book related to Metering, Systems & Services and represented roughly two and a half years of segment revenue at the current run rate.

HPL also said AMISP dispatch schedules can cause quarter-to-quarter revenue variability in Metering, Systems & Services. In H1 FY27, the segment's revenue increased 17.40% to Rs 508.50 crore and its EBIT margin declined to 13.17% from 17.59%, while Consumer, Industrial & Services revenue rose 60.03% to Rs 615.05 crore.

Conclusion

HPL's Q2 and H1 FY27 figures show that sales growth did not translate proportionately into profit growth. Q2 revenue rose 40.02%, led by a 64.42% increase in Consumer, Industrial & Services revenue, but cost of goods sold rose 57.65%, producing a 799-basis-point reduction in gross margin and limiting profit-after-tax growth to 4.68%.

The next disclosed factor to watch is management's expectation that pricing actions across Wires & Cables, Lighting and Switchgear will flow through progressively from H2 FY27. Results will also depend on the conversion timing of the above-Rs 2,700 crore Metering, Systems & Services order book, as HPL says AMISP dispatch schedules can affect quarterly revenue timing.