Cosmo Ferrites (COSMOFE) Q2 FY27 Profit Slips 30% Despite Record Revenue
The ferrite core maker posted its highest quarterly sales but saw profits fall sequentially as costs rose faster than revenue, raising questions about earnings quality.
Cosmo Ferrites reported a 24% yearly jump in Q2 FY27 revenue to ₹31.39 crore, but net profit fell 30% from the previous quarter to ₹0.69 crore. The squeeze highlights rising cost pressures and a heavy reliance on non-operating income for profitability.
For a manufacturer of soft ferrite cores, growth hinges on capturing demand from electric vehicles and power electronics. Cosmo Ferrites saw that demand arrive in the September quarter, with revenue hitting a multi-quarter high. Yet the profit that followed it home was thinner, revealing a business struggling to convert top-line wins into sustainable earnings.
Revenue rose 24.1% year-on-year to ₹31.39 crore, and grew 8.3% from the June quarter. Net profit, however, fell 30.3% sequentially to ₹0.69 crore, even as it swung from a year-ago loss. The net profit margin compressed to 2.2% from 3.4% last quarter.
Revenue & profit
Revenue (₹ Cr)
Net Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ2 FY27 (Sep 2026) | PreviousQ1 FY27 (Jun 2026) |
|---|---|---|
| Revenue (₹ Cr) | 31.39 | 28.98 |
| Net Profit (₹ Cr) | 0.69 | 0.99 |
| Net Profit Margin | 2.2% | 3.4% |
Why the profit fell as sales rose
Total expenses jumped 12% quarter-on-quarter, outpacing the 8.3% revenue growth. MarketsMojo reported that employee costs rose to ₹7.04 crore from ₹6.49 crore, while operating margins excluding other income contracted sharply. The cost of materials also increased with higher production volumes.
A critical factor was a surge in other income, which nearly doubled to ₹1.36 crore. MarketsMoji noted this represented 149% of the pre-tax profit, implying the core business would have been loss-making without it. This reliance on non-operating sources casts doubt on the quality and sustainability of the reported profit.
The balance sheet binds
High debt continues to weigh on the company. The debt-to-equity ratio stands at 3.0, and interest expense, though down yearly, consumed a significant portion of operating profit. StockFin.ai analysis indicates the company is focusing on operational stabilisation and debt servicing rather than aggressive reinvestment.
Simultaneously, working capital stretched. Trade receivables surged to ₹28.58 crore from ₹21.21 crore at the end of FY26, as noted by ScanX. This suggests sales growth may be coming at the cost of extended credit, tying up cash.
Capacity build meets market reality
Management is betting on future demand, announcing a capacity expansion plan. According to a company investor deck highlighted by StockFin.ai, a new Top Hat Kiln will add 25 tonnes per month of high-permeability ferrite core capacity for EV and high-end applications.
The global Mn-Zn ferrite market is projected to grow, driven by EV adoption and renewable energy. However, research from Lucintel cited by GIIResearch notes the market remains cost-sensitive, with pricing pressure outside of premium, low-loss materials. Cosmo Ferrites must navigate this competitive landscape while managing its strained finances.
The market reaction was negative, with the stock closing at ₹141.5 on November 5, down nearly 5%. MarketsMojo reported the stock's technical trend turned 'mildly bearish', reflecting investor concern over margin compression and high valuation relative to peers.
Key Points
- Revenue reached a multi-quarter high of ₹31.39 crore, up 24% year-on-year and 8% sequentially.
- Net profit fell 30% quarter-on-quarter to ₹0.69 crore as expenses grew faster than sales, squeezing margins.
- Profitability was heavily supported by other income, which accounted for 149% of pre-tax profit, raising concerns about core earnings quality.
- High debt (D/E of 3.0) and stretched receivables constrain financial flexibility despite plans to add capacity for EV-focused products.
Hexa Perspective
This quarter frames Cosmo Ferrites' central challenge: riding a sector tailwind with an over-leveraged balance sheet. The revenue growth is real, but the margin squeeze shows the company lacks pricing power or cost control to capture that value.
The path to sustainable profit requires the new capacity to deliver higher-margin sales without further straining working capital. Until the core operations can consistently generate profit before other income, the high debt load makes the equity story fragile, a concern clearly priced in by the market's skeptical reaction.
Also read
Want this applied to your portfolio?
Talk to a HexaWealth advisor, or sync your mutual fund data for insights tailored to your holdings.
