IIL H1FY27 profit falls 15% as operating margins narrow

Insecticides (India) Limited reported H1FY27 profit after tax of Rs 100.04 crore, down 15% year on year, as revenue from operations fell 2% to Rs 1,297.84 crore and EBITDA margin declined to 12.3% from 13.1%. IIL’s gross-profit margin nevertheless rose by 1.0 percentage point to 32.7%.

Why did IIL’s H1FY27 profit fall 15%?

IIL’s profit after tax fell to Rs 100.04 crore in H1FY27 from Rs 117.21 crore in H1FY26, while profit before tax declined 14% to Rs 134.18 crore from Rs 156.31 crore. Earnings before interest, tax, depreciation and amortisation, or EBITDA, decreased 8% to Rs 160.05 crore from Rs 174.06 crore. Profit-after-tax margin narrowed to 7.7% from 8.8%, and earnings per share fell to Rs 34.38 from Rs 40.28.

The reported operating-cost lines increased faster than gross profit. Gross profit increased by Rs 2.95 crore to Rs 424.32 crore, while employee expenses rose by Rs 12.53 crore to Rs 101.83 crore and other expenses rose by Rs 4.43 crore to Rs 162.44 crore. This was accompanied by an Rs 14.01 crore decline in EBITDA.

How did IIL’s revenue and gross margin change in H1FY27?

IIL’s revenue from operations declined 2% to Rs 1,297.84 crore in H1FY27 from Rs 1,328.83 crore in H1FY26. Total raw-material cost declined by Rs 33.95 crore to Rs 873.51 crore, exceeding the Rs 30.99 crore reduction in revenue. Consequently, gross profit rose by Rs 2.95 crore despite the lower revenue base.

IIL’s gross-profit margin increased to 32.7% in H1FY27 from 31.7% a year earlier. Cost of material consumed rose to Rs 759.50 crore from Rs 735.91 crore, while purchases of stock in trade increased to Rs 183.56 crore from Rs 102.95 crore. The change in inventories of finished goods and work in progress was negative Rs 69.55 crore, compared with positive Rs 68.61 crore in H1FY26, resulting in the lower total raw-material cost.

The second-quarter result showed a different margin comparison. Q2FY27 revenue grew 8% to Rs 686.31 crore from Rs 637.70 crore, and gross profit increased 5% to Rs 231.16 crore from Rs 219.72 crore. However, Q2 gross-profit margin declined to 33.7% from 34.5%, unlike the improvement recorded across the six-month period.

What moved IIL’s operating and pre-tax margins lower?

IIL’s EBITDA margin declined to 12.3% in H1FY27 from 13.1% in H1FY26, alongside the 8% reduction in EBITDA to Rs 160.05 crore. Employee expenses increased to Rs 101.83 crore from Rs 89.30 crore, while other expenses increased to Rs 162.44 crore from Rs 158.01 crore. These costs increased even as revenue declined by 2%.

Below EBITDA, depreciation increased to Rs 19.60 crore from Rs 16.64 crore, while other income declined to Rs 4.51 crore from Rs 6.21 crore. Earnings before interest and tax, or EBIT, therefore declined 11% to Rs 144.96 crore from Rs 163.63 crore. EBIT margin fell to 11.2% from 12.3%.

Finance cost rose to Rs 11.28 crore in H1FY27 from Rs 7.88 crore in H1FY26. IIL’s share from associates was Rs 0.50 crore, compared with Rs 0.55 crore a year earlier, while tax expense declined to Rs 34.14 crore from Rs 39.10 crore. The lower tax charge did not offset the Rs 22.13 crore fall in profit before tax.

How did IIL’s working capital position change by September 2026?

IIL’s net working capital increased to Rs 1,000 crore at September 2026 from Rs 966 crore at September 2025 and Rs 828 crore at March 2026. Net working-capital days were 158 at September 2026, compared with 151 a year earlier and 168 at March 2026. Inventory stood at Rs 814 crore, up from Rs 744 crore in September 2025.

Trade receivables increased to Rs 719 crore at September 2026 from Rs 643 crore a year earlier and Rs 487 crore at March 2026. Receivable days rose to 100 from 87 in September 2025 and 83 in March 2026. Trade payables also rose to Rs 533 crore from Rs 420 crore in September 2025, with payable days increasing to 110 from 83.

The cash-flow statement recorded negative net cash from operating activities of Rs 73.39 crore for the period ended September 2026, against positive Rs 100.25 crore for the year ended March 2026. Changes in working capital were negative Rs 210.91 crore, compared with negative Rs 80.14 crore for FY26. Cash and cash equivalents ended September 2026 at Rs 35.94 crore, down from Rs 87.23 crore at March 2026.

How did IIL perform in Q2FY27 compared with H1FY27?

IIL’s Q2FY27 revenue grew 8% to Rs 686.31 crore, while EBITDA grew 3% to Rs 92.44 crore. Q2 EBITDA margin nevertheless declined to 13.5% from 14.0% in Q2FY26. In contrast, H1FY27 revenue declined 2% and EBITDA declined 8%.

Q2FY27 profit after tax declined 5% to Rs 56.17 crore from Rs 59.11 crore, despite the quarterly revenue growth. Employee expenses rose to Rs 54.49 crore from Rs 47.77 crore, depreciation increased to Rs 9.89 crore from Rs 9.33 crore, and finance cost increased to Rs 6.58 crore from Rs 4.16 crore. Other income was negative Rs 0.84 crore, compared with positive Rs 2.51 crore in Q2FY26.

Q2FY27 accounted for Rs 686.31 crore of H1FY27 revenue of Rs 1,297.84 crore and Rs 92.44 crore of H1FY27 EBITDA of Rs 160.05 crore. Q2 profit after tax of Rs 56.17 crore was also more than half of the H1FY27 total of Rs 100.04 crore. The presentation reports consolidated financial results but does not provide segment-level revenue or profit figures for the quarterly or half-year period.

Conclusion

IIL’s H1FY27 result combined a 1.0-percentage-point rise in gross-profit margin with lower earnings at subsequent profit levels. Revenue declined 2%, EBITDA fell 8%, and profit after tax fell 15%, as employee expenses, other expenses, depreciation and finance cost were higher than in H1FY26.

The main unresolved matter is the source of the contrast between Q2FY27 revenue growth of 8% and the 2% H1FY27 revenue decline. The supplied presentation gives consolidated figures, including September 2026 net working capital of Rs 1,000 crore, but does not disclose segment, product-category or market-level results that would identify the drivers.