Studds Accessories Limited H1 profit falls 34% on cost rise

Studds Accessories Limited reported H1FY27 revenue growth of 16.2% to Rs 352.8 crore, but profit after tax fell 33.8% to Rs 27.0 crore. Studds attributed the reversal to higher styrene-based raw-material costs following crude-oil volatility, as earnings before interest, tax, depreciation and amortisation margin declined to 12.0% from 19.8% a year earlier.

Why did Studds’ H1FY27 profit fall?

Studds’ H1FY27 profit fell because costs increased faster than revenue. Net revenue from operations rose by Rs 49.1 crore, from Rs 303.7 crore in H1FY26 to Rs 352.8 crore, while cost of goods sold increased by Rs 38.7 crore, from Rs 124.8 crore to Rs 163.5 crore. The company attributed the increase to a steep rise in styrene-based raw-material costs driven by crude-oil price volatility.

Gross profit therefore grew more slowly than sales. Gross profit increased 5.8% to Rs 189.3 crore from Rs 178.9 crore, while gross profit margin declined by 520 basis points to 53.7% from 58.9%. Employee cost rose to Rs 36.9 crore from Rs 31.6 crore and other expenses increased to Rs 110.1 crore from Rs 87.1 crore.

Studds’ earnings before interest, tax, depreciation and amortisation, or EBITDA, declined by Rs 17.9 crore to Rs 42.3 crore despite higher sales. Earnings before interest and tax fell 31.4% to Rs 38.0 crore, while profit before tax declined 31.5% to Rs 37.6 crore. Tax expense decreased to Rs 10.6 crore from Rs 14.0 crore, but profit after tax margin still fell to 7.7% from 13.5%.

How did Studds’ Q2FY27 performance compare with Q1FY27?

Studds’ Q2FY27 revenue and profit improved sequentially from Q1FY27, although year-on-year profitability remained lower. Net revenue from operations increased 7.9% from Rs 169.7 crore in Q1FY27 to Rs 183.1 crore in Q2FY27, and was 18.6% above Rs 154.4 crore in Q2FY26. The second quarter consequently accounted for Rs 183.1 crore of the Rs 352.8 crore reported for H1FY27.

Q2FY27 EBITDA was Rs 22.8 crore, down 23.7% from Rs 29.9 crore in Q2FY26, but 16.5% above Rs 19.6 crore in Q1FY27. EBITDA margin rose sequentially to 12.4% from 11.5% in Q1FY27, while remaining below 19.3% a year earlier. Gross profit margin followed the same pattern, reaching 53.8% from 53.5% in Q1FY27 and 58.4% in Q2FY26.

Profit after tax was Rs 14.7 crore in Q2FY27, 19.9% above Rs 12.3 crore in Q1FY27 but 28.5% below Rs 20.6 crore in Q2FY26. The profit after tax margin was 8.1%, compared with 7.2% in the preceding quarter and 13.4% a year earlier. Basic earnings per share were Rs 3.75 in Q2FY27, versus Rs 3.12 in Q1FY27 and Rs 5.24 in Q2FY26; the presentation says quarterly earnings per share are not annualised.

Which sales segments supported Studds’ H1FY27 revenue growth?

Studds’ H1FY27 revenue growth included faster export growth and a larger overseas sales mix. Export revenue rose 49.2% to Rs 79.4 crore from Rs 53.2 crore in H1FY26, exceeding total revenue growth of 16.2%. Exports represented 21.9% of gross billing in H1FY27, compared with 19.2% a year earlier, while India’s share declined to 78.1% from 80.8%.

The product mix also shifted towards SMK Helmets and private labels. SMK Helmets represented 17.9% of H1FY27 gross billing, up from 15.2% in H1FY26, while Private Labels increased to 4.0% from 2.9%. Studds Helmets declined to 71.4% from 74.9%, and Other Accessories decreased to 6.6% from 7.0%; the presentation identifies Daytona and Oneal as private-label brands.

Europe’s gross-billing share increased to 7.1% in H1FY27 from 4.8% in H1FY26, while the United States share rose to 8.7% from 7.5%. Asia excluding India declined to 1.3% from 2.4%. Studds also reported export average selling price, or ASP, of about Rs 2,000 in H1FY27, compared with about Rs 1,600 in FY24, while SMK ASP rose to about Rs 2,900 from about Rs 2,350.

What is Studds doing to manage costs and add capacity?

Studds has implemented calibrated price increases to partly offset higher raw-material costs, but management said a sustained margin recovery depends on raw-material prices stabilising. The managing director cited improving realisations, cost efficiencies and operational performance as areas within the company’s control. The presentation does not quantify the price increases or give a date for input-cost stabilisation.

Studds commenced commercial production at a new facility on 30 October 2026, adding 1.5 million units of annual helmet and box capacity. This Phase 1 expansion increased capacity from 9.5 million units in FY26 to 11.0 million units. Phase 2 is planned over the next 18 to 24 months and would add a further 1.5 million units, taking total capacity to 12.5 million units, about 33% above FY26 capacity.

Studds has incorporated a wholly owned Italian subsidiary to establish a warehousing and distribution hub for Europe. It has also started in-house manufacturing of riding jackets and said Bluetooth-enabled rider communication systems would launch in November 2026. Management described Rs 1,000 crore of medium-term revenue, with exports contributing 25% to 30%, as an aspiration rather than a reported forecast.

Conclusion

Studds increased H1FY27 revenue through domestic and international demand, with export revenue rising 49.2% to Rs 79.4 crore. However, cost of goods sold increased to Rs 163.5 crore, EBITDA fell to Rs 42.3 crore and EBITDA margin contracted by 780 basis points to 12.0%, reducing profit after tax by Rs 13.9 crore to Rs 27.0 crore.

The next developments to watch are the effect of calibrated price increases and any stabilisation in styrene-based input costs, which management says is needed for sustained margin recovery. Operationally, Studds has started Phase 1 production at its new facility, plans Phase 2 over the next 18 to 24 months and has scheduled its Bluetooth communication-system launch for November 2026.