Linc Q2 profit falls 38% as costs outpace revenue growth

Linc Limited reported consolidated profit of Rs 5.20 crore for the quarter ended September 30, 2026, down 38% from Rs 8.44 crore a year earlier, although revenue from operations rose 11% to Rs 154.12 crore. Higher material, traded-goods, employee and other expenses reduced profitability, while joint ventures reported a loss.

Why did Linc’s Q2 profit fall despite higher revenue?

Linc’s consolidated profit after tax declined to Rs 5.20 crore in the September 2026 quarter from Rs 8.44 crore in the September 2025 quarter, a fall of about 38%. Profit before tax fell more sharply, by about 44%, to Rs 7.48 crore from Rs 13.44 crore, showing that the higher sales base did not offset the rise in operating costs.

Total expenses increased about 16% year on year to Rs 147.87 crore, exceeding the 11% rise in revenue from operations to Rs 154.12 crore. As a result, Linc’s reported profit after tax margin, calculated from the disclosed profit and revenue figures, narrowed to about 3.4% from about 6.1% in the corresponding quarter of 2025.

The decline was also visible against the immediately preceding quarter. Linc recorded profit of Rs 6.05 crore in the quarter ended June 30, 2026, compared with Rs 5.20 crore in the September quarter. Revenue from operations increased sequentially from Rs 138.95 crore, but profit before tax decreased from Rs 7.93 crore to Rs 7.48 crore.

Which expenses increased most for Linc in Q2?

Linc’s purchase of stock-in-trade was the largest disclosed expense at Rs 71.68 crore in the September 2026 quarter, up from Rs 58.81 crore a year earlier. Cost of materials consumed increased to Rs 37.20 crore from Rs 26.25 crore, while employee benefits expense rose to Rs 23.82 crore from Rs 21.60 crore.

Other expenses climbed to Rs 22.39 crore from Rs 17.29 crore, a rise of about 30%, and depreciation and amortisation increased to Rs 4.24 crore from Rs 3.78 crore. Finance cost was Rs 0.81 crore, compared with Rs 0.74 crore a year earlier. Changes in inventories produced a negative expense of Rs 12.28 crore, compared with a negative Rs 0.63 crore in the prior-year quarter, partially offsetting the cost increases.

In the first half ended September 30, 2026, Linc’s revenue from operations grew to Rs 293.07 crore from Rs 276.05 crore in the corresponding half of 2025. Yet total expenses rose to Rs 279.33 crore from Rs 256.23 crore, causing first-half profit after tax to decline to Rs 11.25 crore from Rs 15.51 crore.

How did Linc’s joint ventures affect quarterly earnings?

Linc recorded a Rs 0.61 crore share of loss from joint ventures in the September 2026 quarter, compared with a Rs 1.68 crore loss in the September 2025 quarter. The year-on-year joint-venture result therefore improved, but it shifted from a Rs 0.23 crore share of profit in the June 2026 quarter to a loss in the September quarter.

Before the joint-venture result, Linc’s profit for the period was Rs 5.81 crore in the September 2026 quarter, nearly unchanged from Rs 5.82 crore in the preceding June quarter. The Rs 0.61 crore joint-venture loss reduced the final consolidated profit to Rs 5.20 crore, compared with Rs 6.05 crore in the June quarter when joint ventures contributed profit.

The review report identified two joint-venture contributions for the September 2026 quarter: a Rs 0.11 crore loss from one India-incorporated venture and a Rs 0.50 crore loss from another venture. The latter venture’s financial information was certified by its management, and the statutory auditor stated that those results were not material to the group.

What did Linc report on cash flow and balance-sheet changes?

Linc generated Rs 4.17 crore of net cash from operating activities in the half year ended September 30, 2026, compared with Rs 26.25 crore in the prior-year half. The lower operating cash generation came as inventories increased by Rs 36.41 crore and trade receivables increased by Rs 4.21 crore, although trade payables increased by Rs 19.62 crore.

The group spent Rs 24.43 crore on investing activities during the six months, compared with Rs 21.22 crore a year earlier. Purchases of property, plant, equipment, intangible assets, capital work in progress and capital advances amounted to Rs 31.68 crore, up from Rs 20.44 crore in the prior-year period.

Cash and cash equivalents were Rs 1.30 crore at September 30, 2026, down from Rs 13.29 crore at March 31, 2026. Total assets increased to Rs 417.67 crore from Rs 359.32 crore over the same period, with capital work in progress rising to Rs 55.20 crore from Rs 33.92 crore and inventories rising to Rs 141.34 crore from Rs 104.93 crore.

What unresolved matter does Linc disclose?

Linc disclosed a goods and services tax, or GST, demand order dated January 31, 2025 concerning the Harmonized System of Nomenclature classification of pen refills and other components. The demand is Rs 3.53 crore for alleged short payment of GST, plus a Rs 3.53 crore penalty and applicable interest.

Linc filed an appeal against the order on March 23, 2025 and has not made a provision for the demand. Management said, based on advice from a taxation expert, that it believes it has a strong case on merits. The filing does not disclose the date for disposal of the appeal or the potential final liability.

Linc operates in one reportable segment, writing instruments and stationery, under Indian Accounting Standard 108, or Ind AS 108. Its consolidated results include five entities besides the holding company, including Gelx Industries Limited in Kenya, Linc On Ecommerce Private Limited, Morris Linc Private Limited, Silka Linc Kirtasiye Urunleri Sanayi Anonim Sirketi in Turkiye, and Uni Linc India Private Limited.

Conclusion

Linc increased September-quarter revenue by Rs 15.05 crore year on year, but expenses increased by Rs 19.94 crore and consolidated profit fell by Rs 3.23 crore. The sequential comparison also shows that a move in joint ventures from a Rs 0.23 crore profit in June to a Rs 0.61 crore loss in September contributed to the lower quarterly result.

Next, readers can watch whether Linc’s higher inventory of Rs 141.34 crore and capital work in progress of Rs 55.20 crore translate into revenue and operating cash flow. The outcome of the March 2025 appeal against the GST demand, penalty and applicable interest also remains unresolved under the company’s disclosed plan.