KDDL Q4 FY26: Strong Standalone Growth, Consolidated Margins Under Pressure

KDDL ended Q4 FY26 with a sharp improvement in standalone profitability and a solid expansion in consolidated revenues. On a standalone basis, total income rose to 145.3 crore in Q4 FY26, up 42.0 percent year on year, while EBITDA nearly doubled to 36.4 crore, up 87.6 percent. Profit before tax before exceptional items increased to 26.6 crore, up 138.3 percent.

On a consolidated basis, the group reported total income of 584.7 crore in Q4 FY26, up 35.6 percent year on year. EBITDA grew 25.2 percent to 95.0 crore, and profit before tax increased 14.7 percent to 50.4 crore. Profit after tax was 34.5 crore, up 9.4 percent. For the full year, consolidated total income reached 2,207.8 crore, up 30.3 percent, while EBITDA rose 18.3 percent to 363.2 crore. However, FY26 consolidated PAT declined to 135.2 crore from 142.3 crore, reflecting margin compression and higher depreciation and finance costs.

The quarter shows a business that is scaling. But it also shows that the cost of building capabilities and adding capacity is now visible in the consolidated profit line. For investors, the story is about separating the strong operating momentum in manufacturing from the group level effects of expansion and a heavier asset base.

A quarter of operating leverage on standalone books

Standalone performance in Q4 FY26 looked like a classic operating leverage quarter. Revenue rose to 147.5 crore from 98.9 crore in Q4 FY25, a 49.1 percent increase. Total income came in at 145.3 crore, despite negative other income of minus 2.2 crore.

Gross profit increased to 107.1 crore from 73.7 crore. Gross margin held firm at 73.7 percent versus 72.1 percent a year ago, even with higher scale. The bigger story was below gross profit. Employee expenses and other expenses rose, but not enough to offset the revenue step-up. EBITDA expanded to 36.4 crore from 19.4 crore and EBITDA margin improved to 25.1 percent from 19.0 percent.

Profit before tax before exceptional items rose to 26.6 crore from 11.2 crore, and PAT more than doubled to 19.8 crore from 8.2 crore. For FY26, standalone total income grew to 506.0 crore from 383.6 crore. EBITDA rose to 116.9 crore from 88.5 crore, and PBT before exceptional items increased to 78.4 crore from 58.8 crore.

One detail worth noting is how exceptional items affected year level comparability. In FY26 standalone results, PBT after exceptional items was 96.5 crore versus 78.4 crore before exceptional items. The presentation attributes 18.0 crore of dividend income received from Mahan Distribution Limited as an exceptional item in the standalone statement. This boosts reported profitability, but the core operating improvement is still evident even before exceptional items.

Consolidated scale is rising, but the profit mix is changing

At the consolidated level, KDDL reported strong top line growth in both Q4 and the full year. Q4 FY26 revenue rose to 575.0 crore from 419.6 crore, up 37.0 percent. Total income rose to 584.7 crore from 431.1 crore.

But margins were lower than last year. Consolidated EBITDA margin in Q4 was 16.3 percent versus 17.6 percent in Q4 FY25. For FY26, EBITDA margin was 16.4 percent versus 18.1 percent in FY25. This is reflected in the shape of FY26 profitability. EBIT rose 9.0 percent to 240.7 crore, but depreciation increased sharply to 122.4 crore from 86.1 crore. Finance cost increased to 42.4 crore from 31.4 crore.

That combination held PBT growth to 3.2 percent for FY26, reaching 195.7 crore versus 189.5 crore. PAT declined to 135.2 crore from 142.3 crore, despite the higher revenue base.

The quarter and year also include a specific statutory impact tied to labor codes of 2.45 crore at the consolidated level. The FY26 consolidated table reflects an exceptional expense of 2.4 crore, linked to this statutory impact.

Minority interest remains a notable line item for investors tracking group earnings. FY26 minority interest was 47.1 crore, and PAT after minority interest was 102.3 crore versus 97.2 crore in FY25.

The overall takeaway is that KDDL is expanding fast at the group level, but the economics of the consolidated mix and the cost profile of a larger asset base matter more than they did a year ago.

Business portfolio and where growth is expected to come from

KDDL positions itself as a diversified manufacturing group with three core pillars: watch components under Taratec, precision engineering under Eigen, and ornamental packaging under Ornipac. The presentation also outlines its subsidiary structure, including Ethos Limited, Mahan Distribution Limited, and Swiss entities such as Estima AG and Pylania SA. It also owns a large stake in Silvercity Brands AG, which holds the Favre Leuba brand.

The medium to long term outlook table gives a useful map of management expectations by segment. Dials and hands are positioned for 10 to 12 percent CAGR over 5 to 7 years, supported by demand from Swiss, Indian, and Japanese brands and higher interest in handcrafted and enamel work. Bracelets are targeted at 20 to 25 percent CAGR, driven by rising Swiss demand and a focus away from the Indian market, with cost effective production as a core advantage.

Two opportunity buckets are quantified in absolute terms. Cases and related parts are shown as a 50 to 75 crore opportunity, driven by Swiss mid end demand and a China plus one opportunity. Ornipac is shown as an 80 to 100 crore opportunity, supported by export potential and a sustainability trend in packaging.

Eigen is positioned as a 20 to 25 percent CAGR opportunity in the US and European markets, focusing on high precision and complex parts across segments. The company also notes certifications such as IATF 16949, ISO 9001, and AS 9100D for its precision engineering operations, suggesting an emphasis on export quality standards and repeat OEM relationships.

Balance sheet signals: investment cycle is visible

The balance sheet adds context to the margin discussion. Standalone total assets increased to 625.0 crore at March 2026 from 544.0 crore at March 2025. Non current assets were 391.5 crore, with property, plant and equipment at 148.7 crore. Current assets increased to 233.5 crore, led by higher inventories of 77.2 crore and trade receivables of 103.3 crore. Cash and cash equivalents rose to 13.8 crore from 2.5 crore.

On the consolidated balance sheet, total assets increased to 2,754.8 crore from 2,090.1 crore. Property, plant and equipment rose to 374.8 crore from 269.8 crore, and right of use assets were 314.7 crore. Current assets were 1,805.3 crore, including inventories of 792.8 crore and bank balances of 526.5 crore. This rising asset base aligns with the step-up in depreciation and the lower consolidated margins.

Leverage looks contained, but working capital and lease liabilities are meaningful. Consolidated non current lease liabilities were 286.9 crore and current lease liabilities were 68.4 crore at March 2026. Consolidated borrowings were 73.9 crore non current and 82.6 crore current.

For investors, the balance sheet message is that KDDL is actively building capacity and capability across India and Switzerland. That can support future growth, but it also puts pressure on near term accounting profitability through depreciation, lease costs, and the operating demands of a larger footprint.

What to watch from here

KDDL’s Q4 FY26 results show strong execution in its standalone manufacturing operations, with revenue growth translating into higher margins and sharply higher profits. The consolidated picture is more nuanced. Revenue growth remains strong, but incremental profitability is being absorbed by a heavier cost structure, higher depreciation, and higher finance costs. The result is a year where PBT growth is modest and PAT is slightly lower, despite a large increase in scale.

The strategic narrative in the presentation is consistent. The company is pushing deeper into global luxury watch supply chains through dials, hands, indexes, bracelets, and Swiss manufacturing. At the same time, it is widening its exposure through Eigen’s precision engineering and Ornipac’s premium packaging. The medium to long term outlook points to multiple growth engines, with bracelets, Eigen, and packaging highlighted as higher growth and higher opportunity areas.

The key investor takeaway is that KDDL’s FY26 performance is best read as an expansion year. The company delivered growth and improved standalone operating leverage, while consolidated margins reflected the cost of scale and investment. If the segment opportunities translate into sustained order flow and better absorption, the current cost base can support stronger profitability. Until then, investors should track margin trajectory, depreciation intensity, and how the group balances growth with returns.