Systematic Industries profit rises 37%, operating cash outflow

Systematic Industries Limited reported profit after tax of Rs 12.7543 crore for the half year ended September 30, 2026, up about 37% year on year, as revenue from operations reached Rs 311.363 crore; operating activities nevertheless used Rs 37.1597 crore of cash after increases in inventory, receivables and short-term advances.

How did Systematic Industries perform in the September half?

Systematic Industries increased profit after tax to Rs 12.7543 crore in the half year ended September 30, 2026, from Rs 9.2848 crore in the corresponding 2025 half. Profit before tax increased to Rs 17.0048 crore from Rs 12.4236 crore, while tax expense rose to Rs 4.2548 crore from Rs 3.1388 crore.

Revenue from operations rose about 23% to Rs 311.363 crore from Rs 253.681 crore a year earlier. Total income increased to Rs 312.3065 crore from Rs 255.7925 crore, although other income declined to Rs 94.35 lakh from Rs 2.1115 crore. The reported increase in total income was therefore led by operating revenue.

Systematic Industries reported basic and diluted earnings per share of Rs 5.71, compared with Rs 5.52 in the September 2025 half. The company disclosed one reportable business segment, so the filing gives no separate product, geography or division-level revenue and profit figures. The September 2026 standalone results are unaudited and were subject to a limited review by Hardik Vora & Associates.

What changed in Systematic Industries' costs and profit?

Systematic Industries reported total expenses of Rs 295.3018 crore, up from Rs 243.3689 crore in the prior-year half, while total income increased by Rs 56.514 crore. That difference lifted profit before tax by Rs 4.5812 crore year on year to Rs 17.0048 crore.

Material consumption rose to Rs 220.5129 crore from Rs 157.3425 crore, while purchases of stock-in-trade fell to Rs 33.1939 crore from Rs 53.3735 crore. Employee benefit expense increased to Rs 11.1163 crore from Rs 8.2803 crore, other expenses rose to Rs 25.9775 crore from Rs 20.9172 crore, and depreciation increased to Rs 3.4188 crore from Rs 3.0813 crore. Finance costs declined to Rs 1.9807 crore from Rs 4.542 crore.

Systematic Industries also reported sequential growth from the half year ended March 31, 2026, when revenue was Rs 298.8312 crore and profit after tax was Rs 11.7303 crore. The company notes that the March 2026 half-year figures are balancing figures derived from the audited full-year accounts and year-to-date financial information.

Why did Systematic Industries report negative operating cash flow?

Systematic Industries recorded net cash used in operating activities of Rs 37.1597 crore for the period ended September 30, 2026 because working-capital movements exceeded its Rs 24.185 crore operating profit before working-capital changes. Inventory absorbed Rs 29.8287 crore, trade and other receivables absorbed Rs 10.8221 crore, and short-term loans and advances absorbed Rs 18.4563 crore.

These movements resulted in cash generated from operations of negative Rs 32.5453 crore, followed by net taxes paid of Rs 4.6145 crore. Increases in trade payables supplied Rs 2.0152 crore and other current liabilities supplied Rs 58.27 lakh, but did not offset the larger cash absorption. The filing compares this outflow with cash generated from operations of Rs 6.07 crore in the year ended March 31, 2026, a period of different length.

The September 30 balance sheet reflects the build-up. Inventories rose to Rs 86.2558 crore from Rs 56.4271 crore at March 31, 2026, trade receivables increased to Rs 87.9027 crore from Rs 77.0806 crore, and short-term loans and advances rose to Rs 34.623 crore from Rs 16.1667 crore. Cash and cash equivalents fell to Rs 1.7566 crore from Rs 12.9384 crore.

How did Systematic Industries fund investment and working-capital needs?

Systematic Industries used Rs 26.451 crore in investing activities during the September 2026 period, including Rs 20.8697 crore of expenditure on fixed assets including capital work in progress and Rs 5.7845 crore of advance payments for capital expenditure. Property, plant and equipment increased to Rs 73.6221 crore from Rs 57.8191 crore, while capital work in progress rose to Rs 3.5377 crore from Rs 1.8867 crore.

Financing activities generated Rs 52.4289 crore, comprising Rs 35.1709 crore of proceeds from short-term borrowings and Rs 19.0396 crore from secured loans, offset by Rs 1.7816 crore of interest paid. Short-term borrowings on the balance sheet increased to Rs 41.469 crore from Rs 6.2982 crore, and long-term borrowings increased to Rs 22.7043 crore from Rs 3.6647 crore.

The operating, investing and financing movements resulted in a net cash decrease of Rs 11.1818 crore during the period. Closing cash and cash equivalents of Rs 1.7566 crore matched the September 30, 2026 balance-sheet figure.

What capital issue and acquisition did Systematic Industries disclose?

Systematic Industries allotted 14,57,400 equity shares at Rs 228 each on November 3, 2026, aggregating to Rs 33.22872 crore, through a preferential issue for cash and share-swap consideration. Paid-up equity capital consequently increased to Rs 23.788642 crore, comprising 2,37,88,642 shares, from Rs 22.331242 crore comprising 2,23,31,242 shares.

Systematic Industries stated that it will acquire 9,996 equity shares representing 99.96% of Wire Brigade Industries Private Limited through a share swap with promoter-group related party Veritas Industries Private Limited. The company said Wire Brigade Industries Private Limited will become its wholly owned subsidiary after the acquisition, while the financial-results note describes the Board-approved transaction as an acquisition of 100% equity shares.

The company disclosed proposed use of Rs 33.9402 crore from the preferential issue: Rs 12.4402 crore for working-capital requirements, Rs 21.4914 crore for acquiring Wire Brigade Industries Private Limited equity, and Rs 8.60 lakh for shares for cash. The November 3 allotment value of Rs 33.22872 crore was below the originally approved maximum of Rs 33.94008 crore for up to 14,88,600 shares.

Conclusion

Systematic Industries delivered higher September-half revenue and profit, but the reported gains did not translate into operating cash generation. Inventory, receivables and short-term advances absorbed more cash than the company’s operating profit before working-capital changes, while higher borrowing funded cash requirements and investment expenditure.

The next disclosures to watch are the deployment of the proposed Rs 12.4402 crore working-capital allocation, completion and accounting of the Wire Brigade Industries Private Limited transaction, and changes in inventory, receivables and short-term advances after September 30, 2026. The filing also leaves a distinction to be clarified between the stated 99.96% shareholding acquisition and the note referring to 100% equity shares.