ISGEC operating profit rises 44% as project margins improve

ISGEC Heavy Engineering Ltd. reported standalone profit from business operations of Rs 244.3 crore in H1 FY27, up 44% from Rs 169.5 crore a year earlier, as Industrial Projects revenue rose 37% to Rs 2,111 crore and its earnings before interest and tax margin increased to 5.5% from 4.4%.

Why did ISGEC’s operating profit rise 44% in H1 FY27?

ISGEC’s profit from business operations increased by Rs 74.8 crore for the half year ended September 30, 2026, while sales revenue grew 35% to Rs 3,009.6 crore from Rs 2,226.9 crore in H1 FY26. The profit-from-business-operations margin increased to 8.1% of sales from 7.6%, a rise of 50 basis points.

The presentation defines profit from business operations through an adjustment to reported standalone profit before tax, or PBT, for specified other-income and other-expense items. Reported PBT increased 24% to Rs 277.2 crore from Rs 223.3 crore, while its margin declined to 8.9% from 9.6%. The faster operating-profit growth reflects a lower net contribution from the specified adjustments in H1 FY27.

How did Industrial Projects affect ISGEC’s H1 FY27 margins?

Industrial Projects was the reported standalone segment with a higher margin in H1 FY27: revenue increased 37% to Rs 2,111 crore from Rs 1,544 crore, while its earnings before interest and tax, or EBIT, margin rose by 110 basis points to 5.5%. The segment’s revenue growth and margin expansion occurred alongside the 50-basis-point increase in ISGEC’s business-operations margin.

Manufacturing of Machinery & Equipment also grew, with revenue increasing 38% to Rs 1,101.3 crore from Rs 796.9 crore. Its EBIT margin, however, declined to 12.8% from 13.8%, a reduction of 100 basis points. Manufacturing retained a higher reported EBIT margin than Industrial Projects, but its margin direction differed during the half year.

The two segments both added revenue, but only Industrial Projects improved its reported H1 margin. Industrial Projects generated Rs 2,111 crore of revenue, compared with Rs 1,101.3 crore for Manufacturing of Machinery & Equipment. ISGEC does not disclose segment EBIT amounts in the presentation, so the figures support a comparison of reported segment revenue and margins rather than an allocation of total operating profit between them.

What does ISGEC’s Q2 FY27 performance show?

ISGEC’s standalone profit from business operations was Rs 123.9 crore in the quarter ended September 30, 2026, up 38% from Rs 89.8 crore in Q2 FY26. Its business-operations margin increased to 8.5% of sales from 7.2%, while sales revenue rose 17% to Rs 1,456.6 crore.

The Q2 margin was also above the 7.7% reported in Q1 FY27, when profit from business operations was Rs 120.3 crore on sales revenue of Rs 1,553 crore. Despite lower sequential sales in Q2, business operating profit was Rs 3.6 crore higher than in Q1 FY27, according to the presentation’s reconciliation.

Industrial Projects revenue rose 22% year on year to Rs 1,014.8 crore in Q2 FY27 and its EBIT margin increased to 5.7% from 4.2%. Manufacturing of Machinery & Equipment revenue increased 17% to Rs 537.1 crore and its EBIT margin rose to 13.7% from 13.1%. Both segments therefore reported higher Q2 margins than a year earlier.

Which items separated ISGEC’s PBT from business operating profit?

ISGEC’s H1 FY27 reconciliation starts with PBT of Rs 277.2 crore, removes interest income of Rs 37.6 crore, foreign-exchange fluctuation gain of Rs 20.1 crore and subsidiary dividend income of Rs 19.9 crore. It adds back finance cost of Rs 27.5 crore and expected credit loss of Rs 17.2 crore, resulting in profit from business operations of Rs 244.3 crore.

The net effect of these specified items was Rs 32.9 crore in H1 FY27, down from Rs 53.8 crore in H1 FY26. Foreign-exchange gain declined to Rs 20.1 crore from Rs 47.2 crore, while interest income increased to Rs 37.6 crore from Rs 27.3 crore. This lower net contribution helps explain why PBT rose 24%, compared with the 44% increase in profit from business operations.

The presentation labels this measure as profit from business operations rather than as a statutory line item. Its calculation excludes the listed interest income, foreign-exchange movements and subsidiary dividends, while adding back the listed finance cost and expected credit loss, to compare the stated operating result across the two periods.

Conclusion

ISGEC’s H1 FY27 standalone performance showed sales revenue rising 35% to Rs 3,009.6 crore and profit from business operations rising 44% to Rs 244.3 crore. Industrial Projects combined revenue growth of 37% with a 110-basis-point EBIT-margin increase, while Manufacturing of Machinery & Equipment recorded 38% revenue growth but a 100-basis-point margin decline.

Next, the presentation’s export outlook is a disclosed area to monitor: H1 exports rose 31% to Rs 557 crore, and exports represented 18% of H1 FY27 total income. ISGEC cited healthy enquiries from Latin America, Africa and Southeast Asia, noted that 23% of its order book was international, and said a weaker rupee supports export competitiveness.