Mehul Colours Limited profit halves despite 20% revenue growth

Mehul Colours Limited reported a 52% year-on-year fall in net profit to Rs 158.32 lakh for the half year ended September 30, 2026, despite revenue from operations increasing 20% to Rs 17.00 crore. Profit after tax fell from Rs 329.29 lakh as material consumption, finance costs and depreciation increased.

Why did Mehul Colours profit fall despite higher sales?

Mehul Colours' profit fell because total expenses increased faster than total income in the half year ended September 30, 2026. Total income rose to Rs 17.45 crore from Rs 14.59 crore a year earlier, while total expenses increased to Rs 15.11 crore from Rs 10.15 crore. Profit before tax consequently declined to Rs 2.34 crore from Rs 4.45 crore.

Material consumption was the largest cost movement, increasing to Rs 11.81 crore from Rs 7.33 crore in the September 2025 half. Other expenses rose to Rs 1.76 crore from Rs 1.62 crore, employee-benefit expense reached Rs 1.10 crore from Rs 1.01 crore, finance costs increased to Rs 8.61 lakh from Rs 1.11 lakh, and depreciation and amortisation rose to Rs 37.57 lakh from Rs 15.51 lakh. These increases exceeded the Rs 2.79 crore rise in revenue from operations.

How did Mehul Colours' first-half earnings compare with prior periods?

Mehul Colours' net profit of Rs 158.32 lakh in the September 2026 half was lower both year on year and sequentially. It was Rs 170.97 lakh below the Rs 329.29 lakh reported in the half year ended September 30, 2025, and Rs 34.69 lakh below the Rs 193.01 lakh reported in the half year ended March 31, 2026. Earnings per share, or EPS, declined to Rs 1.50 from Rs 3.12 a year earlier and Rs 1.83 in the preceding half.

Sales rose on both comparisons. Revenue from operations was Rs 17.00 crore in the reporting half, versus Rs 14.21 crore in the September 2025 half and Rs 16.19 crore in the March 2026 half. Total income of Rs 17.45 crore was only slightly above the preceding half's Rs 17.22 crore because other income dropped to Rs 45.55 lakh from Rs 1.03 crore. There were no exceptional or extraordinary items in the September 2026 reporting period.

The tax charge also changed across the periods, although profit before tax had already fallen to Rs 2.34 crore from Rs 4.45 crore year on year. Total tax expense was Rs 76.02 lakh for the September 2026 half, compared with Rs 1.15 crore a year earlier and Rs 65.93 lakh in the immediately preceding half. Current tax was Rs 67.18 lakh, while deferred tax was Rs 8.84 lakh after a deferred-tax credit of Rs 4.99 lakh in the March 2026 half.

What changed in Mehul Colours' balance sheet and cash position?

Mehul Colours' total assets rose to Rs 49.55 crore as at September 30, 2026 from Rs 45.21 crore at March 31, 2026, while cash and bank balances fell to Rs 8.39 crore from Rs 14.33 crore. Property, plant and equipment increased to Rs 11.02 crore from Rs 3.95 crore, and non-current investments rose to Rs 13.20 crore from Rs 9.47 crore. Inventory increased to Rs 2.72 crore from Rs 2.34 crore, whereas trade receivables reduced to Rs 7.08 crore from Rs 7.96 crore.

The balance sheet recorded a change in the composition of borrowings at September 30, 2026. Long-term borrowings rose to Rs 2.13 crore from Rs 65.59 lakh at March 31, while short-term borrowings declined to Rs 65.54 lakh from Rs 1.31 crore. Shareholders' funds increased to Rs 42.85 crore from Rs 41.27 crore, comprising unchanged share capital of Rs 10.55 crore and reserves and surplus of Rs 32.30 crore.

Cash flow from operating activities was a net inflow of Rs 5.08 crore for the half year ended September 30, 2026, after income taxes paid of Rs 90.37 lakh. The cash-flow statement recorded purchases of fixed assets of Rs 7.44 crore and an increase in non-current investments of Rs 3.73 crore during the half. Net cash and cash equivalents declined by Rs 5.94 crore from the opening balance of Rs 14.33 crore to Rs 8.39 crore at period end.

How is Mehul Colours using its IPO proceeds?

Mehul Colours had used Rs 13.71 crore of the Rs 21.66 crore raised through its initial public offering, or IPO, as of September 30, 2026, leaving Rs 7.95 crore unutilised. The statutory auditor certified that Rs 6.81 crore had been used against the Rs 14.63 crore allocation for a new manufacturing facility. The remaining Rs 7.83 crore under that allocation was temporarily held in a separate bank account.

The company had fully used the Rs 4.00 crore allocated to working-capital requirements and the Rs 2.81 crore allocated to issue expenses. Of the Rs 21.13 lakh earmarked for general corporate purposes, Rs 9.17 lakh had been used and Rs 11.96 lakh remained unutilised in a separate bank account. Mehul Colours stated in its September 30, 2026 deviation-or-variation filing that there was no deviation or variation in the use of IPO funds.

The board approved the unaudited standalone results on November 7, 2026, after review and recommendation by the audit committee. The statutory auditors issued an unmodified limited-review conclusion. Mehul Colours reports one operating segment, manufacturing of masterbatches, and disclosed no subsidiaries, associates or joint ventures as at September 30, 2026.

Conclusion

Mehul Colours generated higher first-half revenue in the period ended September 30, 2026, but the increase did not carry through to earnings. Revenue from operations rose to Rs 17.00 crore, while material consumption rose to Rs 11.81 crore and profit after tax fell to Rs 158.32 lakh. The comparison with Rs 329.29 lakh of profit in the September 2025 half shows that costs increased faster than income.

The next disclosed matter to watch is deployment of the Rs 7.95 crore of IPO proceeds that remained unutilised at September 30, 2026, including Rs 7.83 crore allocated to the new manufacturing facility. The company did not provide a completion date for that facility in this filing. Subsequent financial disclosures can show how the Rs 7.44 crore fixed-asset additions and changed borrowing mix affect sales, costs and cash balances.