Garuda Construction (GARUDA) Q2 FY27 Profit Jumps 51% But Cash Flow Turns Negative
Garuda Construction reported a 51% surge in net profit for Q2 FY27, though a sharp rise in working capital led to negative cash flow from operations.
Garuda Construction's revenue grew 48% year-on-year to ₹172 crore in Q2 FY27, with net profit rising 51%. However, a significant increase in receivables and other current assets turned operating cash flow negative, highlighting a growing working capital strain.
For Garuda Construction, the September quarter was a story of powerful growth on paper running into the hard reality of funding it. The company delivered a 48% annual jump in revenue and a 51% leap in profit, but that performance came with a steep rise in working capital that turned cash flow negative.
The numbers show a business accelerating from a year ago but pausing from the previous quarter. Revenue of ₹172 crore and net profit of ₹41 crore were both down about 2% sequentially from Q1's record highs. The net profit margin held steady near 24%.
Revenue & profit
Revenue (₹ Cr)
Net Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 (Sep 2026) | PreviousQ1 FY27 (Jun 2026) |
|---|---|---|
| Revenue (₹ Cr) | 172.0 | 175.4 |
| Net Profit (₹ Cr) | 41.0 | 41.6 |
| Net Profit Margin (%) | 23.8 | 23.7 |
Where the growth came from
The strong year-on-year expansion was driven by a favorable project mix and execution on a growing order book. A report by ScanX Trade noted the company's EBITDA margin expanded to 31.5%, suggesting operational efficiency improved as revenue grew. This helped offset a nearly 200-fold increase in interest costs, which rose to ₹1 crore from a negligible base a year ago.
The cash flow disconnect
Despite the robust profit, the quarter revealed a significant strain. According to the same ScanX Trade report, cash flow from operations turned negative at ₹(37.6) crore for the half-year ended September. This was driven by a sharp ₹99.7 crore increase in other current assets and a ₹23.0 crore rise in trade receivables.
To bridge this gap, the company increased short-term borrowings by ₹40.6 crore during the half-year. This divergence between reported profit and cash generation is the central tension in these results.
The market's muted cheer
The stock gained over 3% on the results day, as reported by Angel One. However, this comes against a backdrop of a 32% decline in the share price over the past year. The company trades at a P/E of 10.1, a steep 63% discount to the industry average, reflecting market caution despite the headline growth.
Key Points
- Revenue and profit grew strongly by 48% and 51% year-on-year, though both saw a slight sequential dip from Q1's peak.
- Profitability was maintained despite a sharp rise in interest expense, with the net margin steady near 24%.
- A significant increase in working capital requirements turned cash flow from operations negative, forcing a reliance on increased short-term borrowing.
- The stock trades at a deep discount to the industry, indicating investor skepticism about the sustainability of cash flows.
Hexa Perspective
The quarter confirms Garuda Construction's ability to win and execute projects profitably in a supportive real estate environment. The concern is the quality of earnings, as profits are not converting into cash due to stretched working capital.
For the growth story to hold, the company must demonstrate it can collect receivables faster or fund this expansion without continually increasing debt. Until cash flow aligns with reported profit, the valuation gap is likely to persist.
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