Salzer Q2 revenue rose 38%, but EBITDA margin fell 184 bps

Salzer Electronics Ltd reported consolidated Q2 FY27 revenue of Rs 579.77 crore, up 38.40% year on year, but its EBITDA margin fell 184 basis points to 6.89% as total expenditure increased 41.18%, faster than sales. Management attributed the pressure chiefly to elevated and volatile costs of copper, silver, aluminium and plastics.

Why did Salzer's Q2 EBITDA margin fall despite higher revenue?

Salzer's Q2 FY27 EBITDA margin fell because expenditure increased faster than revenue. Consolidated revenue rose by Rs 160.85 crore from Rs 418.92 crore in Q2 FY26, while total expenditure increased by Rs 157.47 crore to Rs 539.82 crore. EBITDA, excluding other income, consequently rose 9.25% to Rs 39.95 crore, substantially below the 38.40% revenue-growth rate.

Raw-material costs accounted for most of the increase. Raw-material expense rose by Rs 151.20 crore to Rs 467.05 crore in Q2 FY27, compared with increases of Rs 3.06 crore in employee cost and Rs 3.22 crore in other expenses. Management identified copper, silver, aluminium and plastics as key volatile inputs across switchgear products, including transformers and contactors.

The EBITDA margin declined to 6.89% from 8.73% a year earlier. A basis point is one-hundredth of a percentage point. Profit after tax rose 11.09% to Rs 14.87 crore, but its margin fell 64 basis points to 2.56% from 3.20%.

How did Salzer's Q2 FY27 results compare with prior quarters?

Salzer's Q2 FY27 earnings improved from Q1 FY27, although margins remained below Q2 FY26 levels. Revenue rose by Rs 81.75 crore from Rs 498.02 crore in Q1 FY27 to Rs 579.77 crore, while EBITDA increased by Rs 8.64 crore to Rs 39.95 crore. EBITDA margin improved 60 basis points sequentially from 6.29%.

Profit before tax was Rs 20.01 crore, compared with Rs 12.69 crore in Q1 FY27 and Rs 18.52 crore in Q2 FY26. The quarter included a Rs 0.35 crore share of profit from an associate, following a Rs 1.08 crore share of loss in Q1 FY27. Basic earnings per share rose to Rs 8.15 from Rs 4.55 sequentially and Rs 7.35 a year earlier.

Standalone results showed a similar year-on-year pattern. Standalone revenue rose 38.55% to Rs 566.29 crore, while EBITDA increased 8.51% to Rs 37.63 crore and EBITDA margin declined 183 basis points to 6.65%. Standalone profit after tax was Rs 13.50 crore, compared with Rs 13.47 crore in Q2 FY26.

Which Salzer segments changed their revenue mix in Q2 FY27?

Salzer's Q2 FY27 revenue mix moved towards Wire & Cable and Building Segment, while Industrial Switchgear remained the largest vertical. Industrial Switchgear represented 56.4% of revenue, down from 63.1% in Q2 FY26. Wire & Cable rose to 36.2% from 31.8%, and Building Segment increased to 7.4% from 5.1%.

Management described Industrial Switchgear as its growth and margin anchor, with about 60% standard products and 40% high-value engineered products. Wire & Cable, which represented 36.2% of Q2 revenue, was affected by copper-price volatility. Management said pricing actions and scale are intended to stabilise that segment's EBITDA margin around 6% to 6.5% over the next few quarters.

The first-half mix reflected the same movement. Industrial Switchgear's share fell to 55.1% in H1 FY27 from 58.7% in H1 FY26, while Wire & Cable increased to 38.1% from 36.4% and Building Segment rose to 6.8% from 4.9%. The presentation linked first-half revenue growth to continued switchgear demand and scaling Wire & Cable volumes.

What did Salzer's H1 FY27 financial performance show?

Salzer's H1 FY27 consolidated revenue grew 25.32%, but EBITDA and profit after tax declined from H1 FY26. Revenue reached Rs 1,077.79 crore from Rs 860.03 crore, while EBITDA excluding other income fell 9.03% to Rs 71.26 crore from Rs 78.33 crore. Total expenditure increased 28.76% to Rs 1,006.53 crore, exceeding the revenue-growth rate.

Raw-material expense increased by Rs 211.35 crore to Rs 865.70 crore in H1 FY27. Employee cost rose by Rs 6.98 crore and other expenses by Rs 6.49 crore. EBITDA margin therefore fell 250 basis points to 6.61% from 9.11%.

Profit after tax declined 24.21% to Rs 23.20 crore, and profit after tax margin fell 141 basis points to 2.15%. Profit before tax was Rs 32.70 crore, down 23.56%, while basic earnings per share declined 25.86% to Rs 12.70 from Rs 17.13. The contrast with Q2's 11.09% profit-after-tax increase reflects the lower profit recorded in Q1 FY27.

What is Salzer doing to address raw-material cost pressure?

Salzer says it is using sourcing efficiencies, product-mix optimisation, operational improvements and calibrated pricing measures to address input costs. Management said pricing measures take effect with a time lag, which remained relevant to the Q2 FY27 EBITDA margin of 6.89%. It expects margins to normalise progressively in the third and fourth quarters of FY27, subject to raw-material prices remaining stable.

Salzer is also building businesses in energy management, electric-vehicle charging and smart metering. Its Saudi Arabia facility has been delayed following what management described as an unforeseen escalation of war in Saudi Arabia. Management now expects operations to commence from April 2027 if uncertainties in the Middle East settle.

Management cited the Government of India's Rs 1.86 lakh crore PM-DHARA scheme, approved on 30 September 2026, as part of the power-infrastructure backdrop. It also identified investments in renewable energy, industrial automation, data centres and electrification as demand drivers for its core business divisions.

Conclusion

Salzer's Q2 FY27 results paired 38.40% consolidated revenue growth with a 184-basis-point EBITDA-margin reduction because raw-material expenditure rose faster than sales. Industrial Switchgear remained the largest business at 56.4% of quarterly revenue, while Wire & Cable's share increased to 36.2% amid copper-price volatility. The first half showed the broader earnings effect: revenue rose 25.32%, but EBITDA declined 9.03%.

The next disclosed markers are management's expectation that margins will progressively normalise in Q3 and Q4 FY27 if raw-material prices stabilise, and its target to begin Saudi Arabia operations in April 2027 if regional uncertainty settles. Execution of pricing measures, sourcing efficiencies and the evolving Wire & Cable mix will determine whether the Q2 margin improvement from Q1 FY27 continues.