Sandhar operating cash trails capex as loans rise in first half

Sandhar Technologies Limited generated Rs 168.54 crore of consolidated operating cash in the first half of fiscal year 2026-27 (H1 FY27), Rs 22.51 crore below its Rs 191.05 crore capital expenditure, while consolidated loans increased Rs 51.02 crore to Rs 999.17 crore. The gap coincided with higher receivables and inventories.

Why did Sandhar’s operating cash flow trail capital expenditure?

Sandhar’s H1 FY27 consolidated operating cash inflow was Rs 168.54 crore, while capital expenditure was Rs 191.05 crore, leaving a Rs 22.51 crore shortfall before other investing and financing cash flows. The company reported Rs 198.73 crore of cash generated from operations, but taxes paid of Rs 30.18 crore reduced the cash inflow from operating activities to Rs 168.54 crore.

Capital expenditure was the main investing outflow in the period, at Rs 191.05 crore, compared with Rs 298.85 crore in the full FY 2025-26. Including Rs 2.18 crore of other receipts, consolidated net cash used in investing activities was Rs 188.86 crore in the six months to September 2026. This exceeded operating cash inflow by Rs 20.32 crore, even before lease payments, interest payments and financing cash flows.

How much did Sandhar’s working capital use cash?

Sandhar’s consolidated working-capital movement consumed Rs 60.41 crore of cash in year to date (YTD) September 2026, as trade receivables increased Rs 163.72 crore and inventories rose Rs 98.07 crore from 31 March 2026. The receivables increase took the balance to Rs 986.78 crore at 30 September 2026, while inventories reached Rs 657.91 crore.

Other current assets rose Rs 63.52 crore to Rs 223.73 crore, while current liabilities and provisions increased Rs 300.49 crore to Rs 1,252.24 crore at 30 September 2026. The consolidated current ratio nevertheless remained unchanged at 0.94 across the two reported balance-sheet dates. The presentation does not provide a component-level reconciliation of the working-capital cash movement.

The first-half working-capital outflow was smaller than the Rs 199.15 crore outflow reported for the full FY 2025-26. Operating profit before working-capital changes was Rs 259.14 crore in YTD Sep’26, and the Rs 60.41 crore movement reduced cash generated from operations to Rs 198.73 crore. The presentation does not identify whether the receivables or inventory increase was concentrated in a particular customer, product line or subsidiary.

How did Sandhar’s borrowings change during the period?

Sandhar increased consolidated total loans by Rs 51.02 crore during the six months to September 2026, with short-term loans rising Rs 60.60 crore and long-term secured loans declining Rs 9.58 crore. Total loans reached Rs 999.17 crore at 30 September 2026, compared with Rs 948.15 crore at 31 March 2026. The reported consolidated debt-equity ratio remained 0.71 at both dates.

The cash-flow statement records Rs 51.02 crore of net borrowing proceeds, matching the balance-sheet increase in total consolidated loans. Lease-liability payments, including lease interest, were Rs 21.32 crore and interest paid was Rs 30.58 crore. Those outflows resulted in Rs 0.88 crore of net cash used in financing activities despite the higher borrowing balance.

How did Sandhar’s cash flow compare with profit and revenue?

Sandhar reported Rs 125.45 crore of consolidated profit before tax and Rs 168.54 crore of operating cash inflow in H1 FY27. Depreciation and amortisation of Rs 101.92 crore and other adjustments of Rs 31.77 crore lifted operating profit before working-capital changes to Rs 259.14 crore. Working-capital movements and taxes then reduced that amount, and operating cash did not cover the Rs 191.05 crore capital-expenditure outflow.

Revenue growth did not translate into similar profit growth in the first half. Consolidated revenue from operations increased 27.08% year on year to Rs 2,999.57 crore in H1 FY27, while earnings before interest, tax, depreciation and amortisation (EBITDA) increased 1.37% to Rs 260.73 crore. EBITDA margin declined to 8.64% from 10.64%, and net profit declined 7.96% to Rs 93.31 crore from Rs 101.38 crore.

Cash and cash equivalents consequently fell to Rs 25.27 crore at the end of YTD Sep’26 from an opening balance of Rs 51.09 crore. The reported net decrease in cash and cash equivalents was Rs 21.20 crore, while a Rs 4.62 crore foreign-currency translation loss reduced the closing balance further. In FY 2025-26, by comparison, Sandhar reported a Rs 16.95 crore net increase in cash and cash equivalents.

Conclusion

Sandhar’s first-half disclosures show that positive operating cash generation did not fully fund investment spending. Working capital absorbed Rs 60.41 crore, alongside increases in trade receivables and inventories, while capital expenditure exceeded operating cash inflow by Rs 22.51 crore. Consolidated loans increased Rs 51.02 crore, driven by a Rs 60.60 crore rise in short-term loans that more than offset lower long-term secured loans.

The next reported periods will show whether receivables of Rs 986.78 crore and inventories of Rs 657.91 crore moderate, and whether operating cash covers capital expenditure without further growth in short-term loans. The presentation discloses no capex target, working-capital target or borrowing-reduction plan beyond the 30 September 2026 balance-sheet and YTD cash-flow figures.