Quality Power working-capital turnover falls to 0.4x in H1 FY27

Quality Power reported working-capital turnover of 0.4x in H1 FY27, down from 0.8x in FY26 and 1.1x in FY25. It nevertheless retained a reported net-cash position of Rs 111 crore, while return on capital employed was 35.4% on the presentation’s last-twelve-month, or LTM, basis.

Why did Quality Power's working-capital turnover fall to 0.4x?

Quality Power's working-capital turnover fell to 0.4x in H1 FY27, from 0.8x in FY26 and 1.1x in FY25. The presentation reports the three-period movement but does not provide a calculation, a definition of working capital, or a stated operational reason for the decline. The 0.4x reading is therefore the disclosed efficiency outcome rather than evidence, on its own, of a particular inventory, receivables or payment policy.

The lower turnover occurred while total income increased to Rs 550 crore in H1 FY27 from Rs 413 crore in H1 FY26, a 33.2% year-on-year increase. This means the working-capital turnover measure weakened despite higher H1 income. The presentation specifies that H1 FY27 ratios are calculated on an LTM basis, so the 0.4x figure is not presented as a six-month standalone ratio.

How has Quality Power's net-cash position changed?

Quality Power remained in a reported net-cash position of Rs 111 crore in H1 FY27, compared with Rs 213 crore in FY26 and Rs 201 crore in FY25. The reported net debt-to-equity ratio remained negative at (0.13)x in H1 FY27, consistent with cash and bank balances exceeding total borrowings in the presentation.

The reported net-cash figure declined alongside total borrowings rising to Rs 40 crore in H1 FY27 from Rs 36 crore in FY26. Cash and cash equivalents fell to Rs 100 crore from Rs 184 crore, while other bank balances declined to Rs 51 crore from Rs 64 crore. Total equity increased to Rs 862 crore from Rs 773 crore over the same comparison.

Do Quality Power's return measures remain above FY25 levels?

Quality Power's return on capital employed, or ROCE, was 35.4% in H1 FY27, below 39.8% in FY26 but above 29.2% in FY25. Return on equity, or ROE, rose to 29.4% in H1 FY27 from 26.6% in FY26 and 25.5% in FY25. The presentation states that H1 FY27 ratios use an LTM basis.

The return measures were reported alongside a larger equity base, which reached Rs 862 crore in H1 FY27 from Rs 594 crore in FY25. Quality Power also reported net debt to LTM earnings before interest, tax, depreciation and amortisation, or EBITDA, of (0.39)x in H1 FY27, compared with (0.90)x in FY26 and (1.68)x in FY25. The less negative ratio reflects the lower reported net-cash position rather than a switch to net debt.

How did Quality Power's debtor, inventory and creditor turnover change?

Quality Power's debtor turnover eased to 4.9x in H1 FY27 from 5.0x in FY26, after improving from 3.1x in FY25. Inventory turnover fell more sharply to 3.1x from 4.7x in FY26, returning to the same 3.1x level reported for FY25. Creditor turnover also declined to 7.7x from 9.0x in FY26, although it remained above FY25's 5.2x.

The disclosed component ratios show that the H1 FY27 movement was not limited to debtor turnover, which was nearly unchanged from FY26. Inventory turnover declined by 1.6x and creditor turnover by 1.3x versus FY26, while working-capital turnover halved from 0.8x to 0.4x. Quality Power does not disclose inventory days, debtor days, creditor days or the underlying balance-sheet amounts in this presentation.

What growth backdrop accompanied Quality Power's H1 FY27 ratios?

Quality Power reported H1 FY27 EBITDA of Rs 149 crore, up from Rs 98 crore in H1 FY26, and profit after tax of Rs 110 crore, up from Rs 72 crore. EBITDA margin increased to 27.0% from 23.7%, while profit-after-tax margin rose to 20.0% from 17.5%. Gross profit, which the presentation says includes other income, rose to Rs 255 crore from Rs 172 crore.

The consolidated order book reached Rs 2,010 crore at Q2 FY27, compared with Rs 1,406 crore at Q4 FY26 and Rs 1,946 crore at Q1 FY27. Endoks accounted for about 39.6% of the Q2 FY27 order book, or Rs 800 crore, while Mehru held Rs 610 crore and Quality Power's standalone operation held Rs 600 crore. These order-book figures provide the operating backdrop but do not establish how future execution will affect working-capital turnover.

Conclusion

Quality Power's H1 FY27 presentation shows a split between working-capital efficiency and reported returns. Working-capital turnover fell to 0.4x from 0.8x in FY26, while ROCE remained 35.4%, ROE reached 29.4%, and the company continued to report net cash of Rs 111 crore rather than net debt.

The next figures to watch are inventory turnover, at 3.1x in H1 FY27, and creditor turnover, at 7.7x, as the Rs 2,010 crore Q2 FY27 order book is executed. Management also disclosed that Endoks had secured close to 1 gigawatt of orders for a Turkey facility designed for approximately 4 gigawatts of battery energy storage system power-conversion and other power-electronics capacity, adding an execution plan to monitor.