Mallcom H1 EBITDA rises 5.1% despite a 3.4% revenue fall

In the first half (H1) of fiscal year (FY) 2027, Mallcom (India) Ltd increased earnings before interest, tax, depreciation and amortisation (EBITDA) 5.1% to Rs 28.9 crore despite a 3.4% fall in operational income to Rs 252.8 crore. Net profit rose 5.1% to Rs 14.3 crore as EBITDA margin reached 11.43%.

How did Mallcom grow earnings while H1 revenue declined?

Mallcom grew H1 FY27 EBITDA to Rs 28.9 crore from Rs 27.5 crore in H1 FY26 while operational income declined to Rs 252.8 crore from Rs 261.8 crore. Total expenses fell 4.4% to Rs 223.9 crore, a faster reduction than the 3.4% decline in income, allowing the EBITDA margin to rise to 11.43% from 10.50%.

Profit after tax (PAT) increased to Rs 14.3 crore from Rs 13.6 crore, while PAT margin moved to 5.66% from 5.19%. Profit before tax (PBT) increased 3.2% to Rs 19.1 crore, with tax expense decreasing 2.0% to Rs 4.8 crore from Rs 4.9 crore.

The cost outcome occurred even as depreciation rose 31.5% to Rs 7.1 crore in H1 FY27 from Rs 5.4 crore a year earlier. Finance cost declined 4.9% to Rs 3.9 crore, other income increased to Rs 1.2 crore from Rs 0.5 crore, and diluted earnings per share rose 5.3% to Rs 22.94.

What drove Mallcom's H1 FY27 margin expansion?

Mallcom attributed the 93-basis-point improvement in H1 EBITDA margin to lower material costs and higher unit sales realisation. These two factors more than offset increases in employee, manufacturing, marketing, operational and administrative expenses during the Rs 252.8 crore first half.

The second quarter (Q2) provided a different view of the half-year trend. Q2 FY27 operational income rose 2.9% year on year to Rs 143.3 crore, and EBITDA climbed 53.5% to Rs 15.2 crore from Rs 9.9 crore. Its EBITDA margin improved 350 basis points to 10.61% from 7.11%, supported by raw-material savings, better unit sales realisation and lower employee, manufacturing and operational expenses.

Sequentially, Q2 revenue rose 30.9% from Rs 109.5 crore in Q1 FY27, while EBITDA increased 10.9% from Rs 13.7 crore. The Q2 EBITDA margin nevertheless declined 190 basis points from 12.51% in Q1 because unit sales realisation was lower, partly offset by savings in employee, manufacturing, operational and administrative expenses alongside higher sales volumes.

Q2 PAT increased 108.1% year on year to Rs 7.7 crore from Rs 3.7 crore, and its PAT margin rose 271 basis points to 5.37%. Compared with Q1 FY27, Q2 PAT increased 16.7% from Rs 6.6 crore, but PAT margin declined 66 basis points from 6.03%, reflecting the quarter-on-quarter margin movement.

How do Mallcom's H1 margins compare with recent years?

Mallcom's H1 FY27 EBITDA margin of 11.43% was above FY26's 11.21% but below the 13.72% reported in FY24 and 12.51% in FY25. H1 FY27 is a six-month period while FY24 through FY26 are full years, so the figures do not provide a like-for-like annual comparison, but the historical series shows the latest half-year level.

The PAT margin of 5.66% in H1 FY27 was slightly above FY26's 5.56%, but remained below FY24's 8.63% and FY25's 11.79%. PAT was Rs 14.3 crore in H1 FY27, compared with Rs 30.0 crore in FY26 and Rs 57.4 crore in FY25; FY25 included Rs 28.9 crore of other income.

Operational income increased in each of the three completed financial years, from Rs 420.7 crore in FY24 to Rs 539.6 crore in FY26. EBITDA did not follow the same pattern: it rose from Rs 57.7 crore in FY24 to Rs 60.9 crore in FY25, then declined to Rs 60.5 crore in FY26 as EBITDA margin fell by 251 basis points from FY24.

What balance-sheet and capacity changes should Mallcom investors track?

Mallcom reported total assets of Rs 556.6 crore at H1 FY27, up from Rs 512.5 crore at FY26, while equity increased to Rs 331.1 crore from Rs 318.4 crore. Current assets rose to Rs 324.3 crore from Rs 283.0 crore, including investments of Rs 36.4 crore compared with Rs 6.0 crore at FY26.

Long-term borrowings increased to Rs 28.0 crore at H1 FY27 from Rs 6.2 crore at FY26, while short-term borrowings were broadly stable at Rs 113.9 crore versus Rs 114.1 crore. Net debt to equity was 0.41 times at H1 FY27, compared with 0.37 times in both FY25 and FY26, and net worth reached Rs 331.1 crore.

During Q2 FY27, Mallcom commenced the third phase of construction at its Chandipur, West Bengal facility. The project adds about 50,000 square feet of floor area intended to support garment and footwear operations, while Mallcom said its order book and enquiry pipeline support expectations of further volume growth and improved cost absorption.

Conclusion

Mallcom's H1 FY27 results show that lower material costs and improved unit sales realisation raised EBITDA and PAT even though operational income fell 3.4%. The 11.43% EBITDA margin exceeded the 10.50% recorded in H1 FY26 and the 11.21% recorded in FY26, while remaining below the 13.72% and 12.51% levels reported in FY24 and FY25.

The next items to watch are whether the Q2 FY27 revenue recovery of 2.9% year on year and 30.9% quarter on quarter continues, and whether volume growth improves cost absorption as management expects. Progress on the 50,000-square-foot Chandipur expansion and the movement in long-term borrowings, which reached Rs 28.0 crore at H1 FY27, are also disclosed factors relevant to subsequent results.