KSE posts Rs 1.23 crore Q2 loss as animal-feed profit reverses

KSE Limited reported a Rs 1.23 crore net loss for the second quarter (Q2) ended 30 September 2026, against a Rs 32.87 crore profit a year earlier, as the animal-feed division moved from a Rs 14.14 crore segment profit to a Rs 7.43 crore loss despite revenue from operations rising 9.1% to Rs 466.15 crore.

Why did KSE report a Q2 loss despite higher revenue?

KSE reported a Q2 loss because total expenses increased faster than revenue and its largest segment by revenue, animal feed, became loss-making. Revenue from operations rose to Rs 466.15 crore in the quarter ended 30 September 2026 from Rs 427.39 crore in the corresponding quarter of 2025, while total expenses climbed to Rs 469.46 crore from Rs 387.28 crore.

Profit before exceptional items and tax fell to Rs 89.46 lakh from Rs 43.75 crore in the prior-year quarter. Profit before tax was also Rs 89.46 lakh, compared with Rs 43.75 crore a year earlier, because KSE reported no exceptional item in the latest quarter. After current tax of Rs 1.50 crore and deferred-tax income of Rs 1.16 crore, KSE recorded a Rs 1.23 crore loss.

KSE's cost of materials consumed rose to Rs 391.63 crore in Q2 from Rs 324.63 crore a year earlier, an increase of Rs 67.00 crore. Purchases of stock-in-trade increased to Rs 33.34 crore from Rs 28.06 crore, while other expenses grew to Rs 30.84 crore from Rs 25.69 crore. These cost movements exceeded the Rs 38.76 crore increase in operating revenue.

Which KSE segment drove the earnings reversal?

KSE's animal-feed division drove the earnings reversal, reporting a Rs 7.43 crore segment loss in Q2 2026 against a Rs 14.14 crore profit in Q2 2025. The division's revenue nevertheless rose to Rs 389.76 crore from Rs 348.98 crore, indicating that the reported deterioration was in segment result rather than sales.

The oil cake processing division reported segment profit of Rs 7.31 crore, down from Rs 29.64 crore in the prior-year quarter, while dairy narrowed its segment loss to Rs 25.84 lakh from Rs 1.72 crore. Total segment result therefore declined to a Rs 37.58 lakh loss from a Rs 42.06 crore profit before finance costs, interest income and unallocated expenditure.

Inter-segment transfers were Rs 62.14 crore in Q2 2026, compared with Rs 44.53 crore in Q2 2025. Before eliminating those transfers, total segment revenue was Rs 528.30 crore, versus Rs 471.93 crore a year earlier. Oil cake processing revenue rose to Rs 121.83 crore from Rs 108.76 crore, and dairy revenue increased to Rs 16.70 crore from Rs 14.19 crore.

How did KSE perform in the first half of 2026-27?

KSE posted a Rs 28.59 lakh net loss for the half year ended 30 September 2026, reversing a Rs 71.43 crore profit in the corresponding half of 2025. Revenue from operations increased to Rs 919.82 crore from Rs 843.39 crore, but total expenses rose to Rs 925.86 crore from Rs 755.85 crore.

Profit before tax for the six months fell to Rs 40.37 lakh from Rs 95.71 crore. The first-half result included Rs 47.17 lakh of exceptional income, described as a further insurance claim for flood-related raw-material damage in Tamil Nadu during financial year (FY) 2023-24. KSE had already received Rs 2.51 crore for the same damage in FY 2024-25.

The animal-feed division reported a first-half segment loss of Rs 4.35 crore, compared with a Rs 35.87 crore profit a year earlier. Oil cake processing profit declined to Rs 3.56 crore from Rs 59.52 crore, while dairy reported a Rs 35.44 lakh profit against a Rs 4.04 crore loss in the prior-year half. The dairy improvement did not offset the declines in the two larger divisions.

What balance-sheet and cash-flow changes did KSE disclose?

KSE reported total assets of Rs 391.32 crore at 30 September 2026, down from Rs 430.56 crore at 30 September 2025, while total liabilities fell to Rs 66.37 crore from Rs 79.01 crore. Animal-feed assets stood at Rs 140.20 crore, oil cake processing assets at Rs 75.62 crore and dairy assets at Rs 16.34 crore.

Cash and cash equivalents were Rs 7.25 crore at 30 September 2026, compared with Rs 11.76 crore a year earlier. During the six months ended 30 September 2026, KSE paid Rs 23.72 crore in dividends, compared with Rs 16.12 crore in the prior-year period. Cash and cash equivalents declined by Rs 20.52 crore during the latest half year, from Rs 27.77 crore at its start to Rs 7.25 crore at its close.

KSE purchased investments worth Rs 166.58 crore and redeemed investments worth Rs 207.31 crore during the six months ended 30 September 2026. It also incurred Rs 62.84 lakh on property, plant and equipment purchases, compared with Rs 6.49 crore in the corresponding 2025 half year. The cash-flow statement showed finance costs of Rs 1.00 crore for the 2026 half year, compared with Rs 97.67 lakh a year earlier.

What property litigation and impairment did KSE disclose?

KSE disclosed a Rs 1.81 crore provision for probable impairment loss relating to a disputed 25% undivided interest in land acquired in August 2021. The land comprises about 24.68 acres at Muthalamada No.1 Village in Palakkad district and had a total capitalised cost of about Rs 7.24 crore.

KSE said civil and criminal proceedings involving the antecedent title deed of the property's 25% ownership interest began after acquisition, and an interim injunction restraining alienation remains in force. Management said it created the provision based on legal opinion obtained during the quarter and available data, and will reassess the impairment based on developments in the proceedings, legal advice and reliable valuation evidence.

The statutory auditors issued an unmodified limited-review conclusion on KSE's unaudited standalone results, which its board approved on 12 November 2026. The auditors drew attention to the property litigation note but did not modify their conclusion on the financial statements.

Conclusion

KSE's Q2 result shows that a 9.1% increase in revenue to Rs 466.15 crore did not translate into earnings, as material costs, stock purchases and other expenses rose and the animal-feed division swung to a Rs 7.43 crore loss. Profit before tax consequently declined from Rs 43.75 crore to Rs 89.46 lakh, producing a Rs 1.23 crore net loss.

The next disclosed matters to watch are whether animal-feed and oil cake processing segment results change after their first-half declines, and whether cash and cash equivalents recover from Rs 7.25 crore at 30 September 2026. KSE also said the Rs 1.81 crore impairment provision on the disputed land interest will be reassessed as legal proceedings, legal advice and valuation evidence develop.