One Sudarshan cuts net debt to Rs 580 crore in H1 FY27, EBITDA rises

In H1 FY27, One Sudarshan cut net debt to Rs 580 crore from Rs 755 crore at FY26 while consolidated business EBITDA rose 96.2% year on year to Rs 487 crore, lifting the business EBITDA margin to 9.0% from 5.1%.

What drove One Sudarshan's H1 FY27 EBITDA increase?

One Sudarshan's H1 FY27 business EBITDA increased to Rs 487 crore from Rs 248 crore in H1 FY26, a 96.2% rise, while revenue from operations grew 10.0% to Rs 5,385 crore. The business EBITDA margin expanded by 4.1 percentage points to 9.0%, meaning operating profit grew faster than consolidated sales after inter-group sales eliminations.

The Acquired Group provided most of the business EBITDA increase. Its business EBITDA rose by Rs 170 crore to Rs 240 crore in H1 FY27 from Rs 70 crore in H1 FY26, and its margin reached 6.1% from 2.0%. Legacy Sudarshan business EBITDA increased by Rs 65 crore to Rs 243 crore, while its margin increased to 14.9% from 13.3%.

Reported EBITDA was Rs 527 crore in H1 FY27, Rs 40 crore above business EBITDA of Rs 487 crore. One Sudarshan defines reported EBITDA as operating profit including finished-goods and work-in-progress inventory movements, whereas business EBITDA excludes that inventory effect. The reported figures also exclude a Rs 43 crore foreign-exchange gain on redeemable preference shares in H1 FY26 and a Rs 1 crore foreign-exchange loss in H1 FY27.

Legacy Sudarshan's H1 FY27 EBITDA included Rs 16 crore of inventorised overhead arising from higher stock. Excluding that effect, the presentation puts Legacy Sudarshan's normalised EBITDA at Rs 227 crore, or 13.9% of revenue, and One Sudarshan's normalised EBITDA at Rs 471 crore, or 8.7% of revenue.

How did One Sudarshan's balance sheet change in H1 FY27?

One Sudarshan reduced net debt by Rs 175 crore, from Rs 755 crore at FY26 to Rs 580 crore in H1 FY27. Its net-debt-to-equity ratio declined to 0.2 from 0.3, while net working capital as a percentage of sales decreased to 25.3% from 25.9%.

The presentation defines net debt as debt less short-term investments and cash and cash equivalents. The reported Rs 580 crore H1 FY27 balance includes Rs 50.9 crore relating to a subsidiary held for sale. Management said it remains focused on net-working-capital efficiency after the 0.6-percentage-point reduction in working capital as a share of sales.

One Sudarshan reported earnings per share of Rs 26.2 in H1 FY27 and return on capital employed of 22.6%, compared with Rs 6.6 and 10.8%, respectively, for FY26. The company says earnings per share is not annualised and is before exceptional items. It calculates return on capital employed and net working capital using annualised revenue and earnings before interest and tax.

What did One Sudarshan report for Q2 FY27?

One Sudarshan reported Q2 FY27 revenue of Rs 2,743 crore, up 14.9% from Rs 2,387 crore in Q2 FY26, while business EBITDA rose 149.5% to Rs 239 crore from Rs 97 crore. Business EBITDA margin was 8.7%, compared with 4.0% a year earlier, but was below the 9.4% reported in Q1 FY27.

Sequentially, revenue increased from Rs 2,642 crore in Q1 FY27 to Rs 2,743 crore in Q2 FY27. Business EBITDA, however, declined by Rs 8 crore from Rs 247 crore, and reported EBITDA declined by Rs 5 crore from Rs 266 crore to Rs 261 crore. Profit before tax excluding redeemable preference share impact and before exceptional items was Rs 148 crore, against Rs 164 crore in Q1 FY27 and Rs 15 crore in Q2 FY26.

Inventory movements explain part of the gap between reported and business EBITDA in the quarter. For the Acquired Group, Rs 22 crore of inventorised overhead from increased stock lifted reported EBITDA to Rs 134 crore from business EBITDA of Rs 112 crore. Legacy Sudarshan's Q2 FY27 EBITDA included Rs 3 crore of inventorised overhead from higher stock; excluding this, One Sudarshan's normalised EBITDA was Rs 236 crore, or 8.6% of revenue.

Why is RIECO an execution risk for One Sudarshan?

RIECO remained loss-making in H1 FY27, recording revenue of Rs 85 crore against Rs 111 crore in H1 FY26 and EBITDA of negative Rs 13 crore against positive Rs 6 crore. Its EBITDA margin moved to negative 15.2% from positive 6.1%, and profit before tax moved to a loss of Rs 17 crore from a profit of Rs 2 crore.

The Q2 FY27 comparison also shows the operational pressure. RIECO revenue was Rs 47 crore, down 21.3% from Rs 60 crore in Q2 FY26, and EBITDA was negative Rs 3 crore versus positive Rs 6 crore. The Q2 EBITDA margin was negative 6.4%, compared with positive 10.0% a year earlier.

One Sudarshan attributed RIECO's execution challenges to supply-chain bottlenecks. It also said two late-stage projects had cost overruns that were fully accounted for during Q2 FY27. RIECO's negative Rs 13 crore H1 EBITDA therefore contrasts with the Rs 487 crore business EBITDA generated by One Sudarshan as a whole.

Conclusion

One Sudarshan's H1 FY27 results combine a Rs 175 crore reduction in net debt with a near doubling of business EBITDA to Rs 487 crore. The Acquired Group's Rs 170 crore increase in business EBITDA was central to the margin expansion, while RIECO's negative Rs 13 crore EBITDA remains a separate execution issue.

Next, investors can watch the remaining SAP and global capability centre integration work, which management said is progressing and continues to support value capture. Management reaffirmed FY27 guidance for the Acquired Group of about EUR 700 million in sales and about EUR 35 million in EBITDA, while noting geopolitical uncertainty and gross domestic product performance in core markets as challenges.