IFB Industries Q2 FY27 Revenue Up 14%

Revenue: ₹1,512 crores (vs. ₹1,327 crores in Q2 FY26), a growth of 14.04% YoY.
PBDIT: ₹90.92 crores (vs. ₹102.50 crores in Q2 FY26), a decline of 11.3% YoY.
PBDIT Margin: 6.01% (vs. 7.73% in Q2 FY26).
PBT: ₹53.86 crores (vs. ₹68.32 crores in Q2 FY26).
PBT Margin: 3.56% (vs. 5.16% in Q2 FY26).
PAT: ₹39.56 crores (vs. ₹49.75 crores in Q2 FY26).
PAT Margin: 2.62% (vs. 3.75% in Q2 FY26).

Revenue: ₹3,042 crores (vs. ₹2,637 crores in H1 FY26), a growth of 15.34% YoY.
PBDIT: ₹179.38 crores (vs. ₹172.45 crores in H1 FY26).
PBDIT Margin: 5.9% (vs. 6.5% in H1 FY26).
PBT: ₹105.40 crores (vs. ₹102.25 crores in H1 FY26).
PBT Margin: 3.3% (vs. 3.9% in H1 FY26).
PAT: ₹77.62 crores (vs. ₹75.11 crores in H1 FY26).
PAT Margin: 2.5% (vs. 2.9% in H1 FY26).

Management attributed the decline in profitability primarily to:

An increase in material cost due to a hike in commodity prices.
An adverse foreign exchange impact.
The Bill of Materials (BOM) cost increased by approximately 4.3%.
Staff costs decreased YoY, but other expenses increased due to higher office expenditures.
Price hikes taken by the industry were not sufficient to fully pass on the increased commodity and forex costs.

Growth: The division grew 10.5% YoY in Q2. H1 growth stands at 14.5%.
Market Share: Market shares were maintained or slightly increased in washing machines, refrigerators, and ACs. Market share increased in microwaves and dishwashers.
Product Trends: In washing machines, there is a consumer shift towards higher capacity machines (8kg and above), with a new segment emerging for 12kg+ models.
Sales & Promotion: Sales promotion expenditure (including Counter Sales Representation) decreased to 4.58% of revenue in H1 FY27 from 5.92% in H1 FY26.
Strategy: Focus remains on cost innovation, improving field force productivity, in-store visibility, and ensuring trade scheme efficiency without compromising product quality or customer experience.
Outlook: Management maintains an aspirational target of ~20% annual growth, expecting a stronger Q3 due to the Diwali festival period (shifted from Q2 last year to Q3 this year).

Performance: The division achieved its budget for both top-line revenue and bottom line in H1.
Growth Drivers: Growth was primarily led by fine blanking and stamping operations.
Business Mix: End-application mix is approximately 50% two-wheelers, 40% four-wheelers, and 10% three-wheelers and electrical vehicles.
Capex & Expansion:
Acquired land in Gujarat for manufacturing EV components for four-wheelers, with a planned capex of ₹103 crores. Production is expected to commence by September-October 2027.
Setting up a new chain plant to mitigate import dependency and boost revenue.
The Steel division increased its furnace annealing capacity from 1,500-1,700 tons per month to 2,800 tons per month. Its customer base is a 60/40 mix of internal (IFB) and external customers.
Order Book: New order booking target is ₹500 crores, of which ₹220 crores has been achieved as of the call date.
Outlook: Management expects to continue the current growth pattern provided market conditions remain stable.

Share of Loss: The company recorded a share of loss from its associate of ₹6.23 crores for H1 FY27, compared to ₹3.23 crores in H1 FY26.
Reason for Increased Loss: The increased loss at IFB Refrigeration was attributed to an 8-10% rise in material costs, as most of its materials are oil-based and were impacted by global price increases.

H1 FY27 Capex: Total capex for the first half stood at ₹28.58 crores (Q1: ₹12.43 cr, Q2: ₹16.15 cr).
Capital Work-in-Progress (CWIP): Stood at ₹40 crores, pertaining to various ongoing projects expected to be capitalized over the next 7-8 months.
Lease Rentals: A significant increase in lease rental principal repayment in the cash flow (from ₹19 cr to ₹57 cr) was due to payments for the new Gujarat plant.
Debt Policy: The company generally follows a 1:1 debt-to-equity policy for funding projects and has historically been net cash positive. This policy is planned for the Gujarat EV project.

The 10% EBITDA margin target for the Home Appliances division is not intact in the near term due to persistent commodity and forex headwinds.
There are no current plans to demerge the Engineering division or consolidate manufacturing facilities.
The company continues to evaluate acquisition targets (over 72 companies reviewed) that offer synergy, a non-disruptive product line, and future growth opportunities.
The commercial/industrial washing machine segment has an estimated market size of ₹400-500 crores, where IFB claims a #1 position with a 20-25% market share.

#Tags: #IFBIndustries #Q2Earnings #SEBIReg30 #HomeAppliances #Engineering #Neutral