Quality Power first-half profit rises 52%, cash generation lags

Quality Power Electrical Equipments Limited reported consolidated revenue from operations of Rs 505.193 crore for the six months ended September 30, 2026, up 32% year on year, while profit rose 52% to Rs 110.052 crore. However, a Rs 103.196 crore inventory-related working-capital outflow restricted net operating cash generation to Rs 7.079 crore.

How did Quality Power perform in the first half?

Quality Power increased revenue, total income and profit in the six months ended September 30, 2026. Revenue from operations rose by Rs 122.718 crore from Rs 382.475 crore a year earlier, while total income, including other income, increased to Rs 549.982 crore from Rs 412.953 crore. Profit before tax rose to Rs 136.616 crore from Rs 88.618 crore, and profit for the period increased by Rs 37.821 crore.

Quality Power’s revenue from operations for the September 2026 quarter was Rs 272.528 crore, compared with Rs 232.665 crore in the June 2026 quarter and Rs 205.758 crore in the September 2025 quarter. Quarterly profit was Rs 63.327 crore, against Rs 46.724 crore in the preceding quarter and Rs 35.168 crore a year earlier. Basic and diluted earnings per share for the six-month period were both Rs 10.14, calculated using 7,74,44,100 shares.

The Board approved the unaudited consolidated results on October 31, 2026. The independent reviewer stated that nothing had come to its attention to indicate that the financial results did not disclose required information or contained a material misstatement. The consolidated results cover subsidiaries, a step-down subsidiary, a step-down associate and a joint venture treated as an associate.

What changed in Quality Power’s costs and income?

Quality Power’s expense mix changed alongside the Rs 122.718 crore increase in first-half revenue. Cost of materials consumed rose to Rs 239.828 crore from Rs 227.383 crore, while purchases of traded goods increased to Rs 105.182 crore from Rs 8.669 crore. Employee benefits expense rose to Rs 57.622 crore from Rs 46.461 crore during the same comparison.

The income-statement line for changes in inventories of finished goods, traded goods and work in progress was negative Rs 50.070 crore, compared with positive Rs 4.895 crore in the prior-year first half. Other expenses increased to Rs 48.685 crore from Rs 27.832 crore, while depreciation and amortisation increased to Rs 7.802 crore from Rs 5.667 crore. Finance costs rose to Rs 4.317 crore from Rs 3.428 crore.

Other income increased to Rs 44.789 crore from Rs 30.478 crore, contributing to the rise in total income. The tax calculation included an Rs 27.258 crore credit relating to earlier years, compared with an Rs 16.356 crore charge in the corresponding six months of 2025. Quality Power also reported Rs 114.906 crore of total comprehensive income, compared with Rs 84.173 crore a year earlier.

Profit attributable to owners of the holding company was Rs 78.551 crore, while Rs 31.502 crore was attributable to non-controlling interests. Other comprehensive income included a Rs 6.286 crore foreign-currency conversion adjustment, compared with Rs 6.143 crore in the prior-year period. These attribution and comprehensive-income items are presented separately from the Rs 110.052 crore profit for the period.

Why was Quality Power’s operating cash flow limited?

Quality Power generated Rs 7.079 crore of net cash from operating activities because working-capital movements absorbed most of its operating profit before those movements. Operating profit before working-capital changes was Rs 118.646 crore, but cash generated from operations fell to Rs 27.409 crore. Income-tax payments of Rs 20.330 crore then reduced the operating cash inflow to Rs 7.079 crore.

The largest working-capital use was a Rs 103.196 crore increase in inventory, compared with a Rs 16.358 crore increase in the first half of 2025. Other current and non-current assets absorbed a further Rs 50.719 crore. These outflows were partly offset by a Rs 29.070 crore increase in trade payables and a Rs 22.909 crore increase in other current liabilities and provisions.

Trade receivables released Rs 10.699 crore of cash during the six months to September 2026, reversing a Rs 70.772 crore cash use in the corresponding 2025 period. Net operating cash flow therefore improved from an outflow of Rs 11.964 crore a year earlier, but remained below the Rs 110.052 crore reported profit. The cash-flow statement shows the difference between the period’s earnings and cash movement in working capital.

The operating cash-flow reconciliation included Rs 7.802 crore of depreciation and amortisation, Rs 4.317 crore of finance cost and a Rs 13.148 crore deduction for interest on fixed deposits. It also recorded a Rs 22.007 crore gross-up effect of hyperinflation at the step-down subsidiary and a Rs 6.286 crore foreign-currency change arising on consolidation. These adjustments are included before the working-capital movements in the cash-flow statement.

How did Quality Power’s balance sheet and cash change?

Quality Power’s inventory balance rose to Rs 219.324 crore at September 30, 2026 from Rs 116.128 crore at March 31, 2026. The Rs 103.196 crore balance-sheet increase matches the inventory cash outflow reported for the six-month period. Trade receivables declined to Rs 231.112 crore from Rs 241.811 crore, consistent with the Rs 10.699 crore cash release in the cash-flow statement.

Other current assets increased to Rs 121.649 crore from Rs 87.411 crore, while total current assets were Rs 779.354 crore at September 30, 2026. Property, plant and equipment increased to Rs 242.138 crore from Rs 229.436 crore, and capital work in progress rose to Rs 110.821 crore from Rs 73.026 crore. Total assets increased to Rs 1,262.812 crore from Rs 1,110.642 crore.

Cash and cash equivalents declined to Rs 99.477 crore at September 30, 2026 from Rs 183.780 crore at March 31, 2026. The Rs 84.303 crore decrease reflected an Rs 87.966 crore investing cash outflow and a Rs 3.416 crore financing cash outflow, partly offset by operating cash generation. Investing cash flow included Rs 51.269 crore spent on property, plant and equipment including capital work in progress and Rs 12.315 crore of advances for fixed assets.

At September 30, 2026, cash equivalents comprised Rs 14.943 crore of bank balances, Rs 84.331 crore of deposits with original maturities below three months and Rs 0.203 crore of cash on hand. Quality Power also reported Rs 24.333 crore of current investments, compared with Rs 5.127 crore at March 31, 2026. The cash-flow statement recorded a Rs 20.096 crore net outflow from investments during the first half.

Conclusion

Quality Power’s first-half results show growth in reported revenue and profit, with revenue from operations increasing 32% to Rs 505.193 crore and profit rising 52% to Rs 110.052 crore. Cash generation did not rise at the same pace because a Rs 103.196 crore inventory build and a Rs 50.719 crore outflow for other current and non-current assets absorbed operating funds.

The disclosed matters to watch are the proposed acquisition of up to 100% of Winwin Speciality Insulators Limited for aggregate consideration of up to Rs 272.340 crore, including cash of up to Rs 123.840 crore, and the proposed qualified institutions placement of up to Rs 700 crore. The Winwin transaction remains subject to conditions precedent and National Stock Exchange of India and BSE approvals on or before March 31, 2027, while the placement requires applicable statutory and regulatory approvals.