Salzer Electronics Ltd H1 revenue rises 25% as profit falls 24%

Salzer Electronics reported consolidated H1 FY27 revenue of Rs 1,077.79 crore, up 25.32% year on year, but profit after tax fell 24.21% to Rs 23.20 crore as its EBITDA margin, excluding other income, declined 250 basis points to 6.61% amid higher input costs.

Why did Salzer Electronics' H1 profit fall despite revenue growth?

Salzer Electronics' profit fell because expenditure increased faster than revenue in H1 FY27. Consolidated total expenditure rose 28.76% to Rs 1,006.53 crore, compared with revenue growth of 25.32% to Rs 1,077.79 crore. Earnings before interest, tax, depreciation and amortisation, or EBITDA, excluding other income, consequently declined 9.03% to Rs 71.26 crore from Rs 78.33 crore.

Profit before tax fell 23.56% to Rs 32.70 crore, while tax expense declined to Rs 8.78 crore from Rs 11.84 crore. The consolidated result also included a Rs 0.73 crore loss from an associate, compared with a Rs 0.33 crore loss a year earlier. Profit after tax margin narrowed 141 basis points to 2.15%, and basic earnings per share fell 25.86% to Rs 12.70.

What drove Salzer Electronics' margin compression?

Higher raw-material costs were the principal driver of Salzer Electronics' H1 margin compression. Raw-material expense rose to Rs 865.70 crore from Rs 654.35 crore, an increase of Rs 211.35 crore, while employee cost increased to Rs 41.05 crore from Rs 34.07 crore and other expenses rose to Rs 99.77 crore from Rs 93.28 crore. Management identified elevated and volatile prices for copper, silver, aluminium and plastics as an issue during the period.

The resulting consolidated EBITDA margin was 6.61% in H1 FY27, down from 9.11% in H1 FY26. That 250-basis-point reduction compared with a 265-basis-point decline in standalone EBITDA margin, which fell to 6.38% from 9.03%. Standalone profit after tax decreased 29.29% to Rs 21.97 crore, compared with the consolidated decline of 24.21% to Rs 23.20 crore.

Did Salzer Electronics improve during the second quarter?

Yes, Salzer Electronics' Q2 FY27 margin improved sequentially from Q1 FY27, although it remained below the prior-year quarter. Consolidated Q2 revenue was Rs 579.77 crore, up 38.40% from Rs 418.92 crore in Q2 FY26 and above Rs 498.02 crore in Q1 FY27. EBITDA excluding other income rose to Rs 39.95 crore from Rs 31.31 crore in the preceding quarter.

The Q2 EBITDA margin increased to 6.89% from 6.29% in Q1 FY27, a sequential improvement of 60 basis points. It was still 184 basis points below the 8.73% recorded in Q2 FY26, when revenue was Rs 418.92 crore. Q2 profit after tax reached Rs 14.87 crore, up 11.09% year on year and above Rs 8.33 crore in Q1, while the profit margin remained below the prior-year level at 2.56% versus 3.20%.

Which Salzer Electronics businesses are affecting the result?

Industrial Switchgear remains Salzer Electronics' largest business, contributing about 56% of revenue, while Wire & Cable contributes about 36% and Building Electrical about 7%, according to management's Q2 business mix. Management described Industrial Switchgear as the growth and margin anchor, with a portfolio mix of about 60% standard products and 40% high-value engineered products.

Wire & Cable is the business most directly exposed to copper-price volatility, management said, and it is pursuing pricing actions and scale to stabilise the segment's EBITDA margin around 6% to 6.5% over the next few quarters. Building Electrical contributes about 7% of revenue through the distribution network. Geographically, India accounted for 76.4% of Q2 FY27 revenue, while Asia excluding India contributed 11.1%, Europe 6.9%, North and South America 4.7%, and the Middle East 0.9%.

What is Salzer Electronics management's margin outlook?

Salzer Electronics management expects margins to normalise progressively from the third and fourth quarters of FY27, subject to raw-material prices remaining stable. Its stated responses to input volatility are sourcing efficiencies, product-mix optimisation, operational improvements and calibrated pricing measures, which management said take effect with a time lag.

Management also said export mix was about 21% in H1 FY27 and described this as a base for expansion, with US and UK tariff benefits expected to begin. The company is building energy-management and electric-vehicle charging businesses, while the planned Saudi Arabia facility has been delayed. Management now expects that facility to commence operations from April 2027, provided Middle East uncertainties settle.

Conclusion

Salzer Electronics converted a 25.32% increase in H1 FY27 consolidated revenue into lower earnings because the 28.76% rise in expenditure, led by Rs 865.70 crore of raw-material cost, outpaced sales growth. The difference is visible in EBITDA falling 9.03%, margin declining to 6.61%, and profit after tax decreasing to Rs 23.20 crore.

The next results will show whether the Q2 margin increase to 6.89% from 6.29% in Q1 can continue. Management's stated condition for a progressive recovery in the third and fourth quarters is stable raw-material prices, while the delayed Saudi Arabia operation remains targeted for April 2027 subject to regional uncertainties.