Hatsun Agro (HATSUN) Q2 FY27 Profit Growth Lags Revenue as Costs Bite
India's largest private dairy company posted 19% revenue growth, but profit rose just 6% as raw material costs surged nearly 40%.
Hatsun Agro's Q2 FY27 shows robust top-line growth of 19.4% YoY, but profit only inched up 5.6%. The gap highlights severe margin pressure from soaring raw milk procurement costs, which rose nearly 40%.
For a dairy giant, the real test is not just selling more milk but keeping a fair share of each rupee. Hatsun Agro Product's September quarter shows that test getting harder. Revenue surged 19.4% from a year ago, but profit grew at less than a third of that pace, as the cost of its most essential input—raw milk—soared.
The numbers tell a story of growth and a squeeze. Revenue came in at ₹2,897.64 crore, up sharply from ₹2,427.59 crore a year earlier. Profit after tax, however, was a more modest ₹115.69 crore, a 5.6% increase from ₹109.54 crore. The net profit margin fell 50 basis points to 4.0%.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 2,897.64YoY +19% | 3,090.49 | 2,427.59 |
| Profit (₹ Cr) | 115.69YoY +5.6% | 133.69 | 109.54 |
| Net Profit Margin (%) | 4.0YoY -11% | 4.3 | 4.5 |
Sequentially, sales and profit both fell from a record Q1, down 6.2% and 13.5% respectively. The company sold 288 crore consumer packs in the first half, averaging about 1.58 crore packs a day, according to Chairman RG Chandramogan.
The 40% cost surge
The gap between top and bottom lines was driven by a sharp spike in input costs. According to a report by scanx.trade, raw material costs jumped 39.6% year-on-year to ₹2,050.69 crore. This surge, driven by higher milk procurement prices, meant total expenses grew faster (20.4%) than revenue.
Management, cited by CNBC-TV18 and others, pointed to inflation in agricultural inputs, geopolitical uncertainty, and El Niño-related factors as industry-wide challenges. The company's EBITDA margin fell to 11.4% from 13.4% a year ago, as operating profit grew a mere 2%.
A strategic push amid pressure
To secure future growth, Hatsun is investing heavily. The company has a ₹1,000 crore capex plan for FY27, targeting expansion in procurement, distribution, and retail outlets, as reported by Inshorts. It aims to grow daily milk procurement from 4.3 million litres to 5 million litres and expand its store network to over 5,000.
This expansion comes as the company pushes beyond its southern stronghold into markets like Maharashtra and Odisha. Demand for its core dairy, cultured products, and ice creams remains encouraging, management said.
Managing a leveraged balance sheet
The aggressive growth plan is supported by a balance sheet carrying significant debt. The debt-to-equity ratio stands at 1.22. However, the company has been actively managing it. Scanx.trade noted non-current borrowings fell to ₹479.08 crore from ₹675.14 crore in March 2026, though current borrowings rose.
Finance costs provided some relief, falling 17.4% year-on-year, which helped cushion the profit margin. The company also paid an interim dividend of ₹10 per share.
Key Points
- Revenue grew a strong 19.4% year-on-year to ₹2,897.64 crore, but profit growth lagged at 5.6%.
- Net profit margin contracted 50 basis points to 4.0% as raw material costs surged nearly 40%.
- The company is executing a ₹1,000 crore FY27 capex plan to expand procurement and distribution.
- Debt remains elevated at a 1.22 debt-to-equity ratio, though finance costs fell, providing some offset.
Hexa Perspective
The quarter underscores the tightrope Hatsun walks. Its branded retail model and expansion drive are delivering impressive revenue growth, but profitability is hostage to volatile milk prices. The nearly 40% jump in raw material costs shows how quickly margins can evaporate.
The planned capex is a bet that scaling procurement and distribution will secure supply and improve efficiency over time. For now, investors are weighing robust top-line momentum against thin, pressured margins and a valuation that trades at a significant premium to the industry. The next few quarters will test whether volume growth and cost management can outrun input inflation.
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