Knack Packaging (KNACK) Q2 FY27 Profit Falls 18% Despite Record Revenue as Costs Bite
Knack Packaging posted its highest-ever quarterly revenue but saw profit drop sequentially as polymer inflation and a loss-making JV squeezed margins.
Knack Packaging reported record Q2 FY27 revenue of ₹294.76 crore, up 12.3% sequentially. However, profit fell 18% to ₹25.02 crore due to severe input cost inflation and losses from its Mexico joint venture.
Knack Packaging’s second quarter was a story of two halves. The company delivered its highest-ever quarterly revenue, riding strong demand for its woven polypropylene bags. Yet, the bottom line told a different tale, as profit slipped from the previous quarter, caught between rising costs and investment in future growth.
The numbers show the split clearly. Revenue rose 12.3% quarter-on-quarter to ₹294.76 crore. Profit, however, fell 18% to ₹25.02 crore. The net profit margin compressed to 8.5% from 11.6% in Q1.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 |
|---|---|---|
| Period | Sep 2026 | Jun 2026 |
| Revenue (₹ Cr) | 294.76 | 262.46 |
| Profit (₹ Cr) | 25.02 | 30.53 |
| Net Profit Margin (%) | 8.5 | 11.6 |
Why the profit win never arrived
The gap between top-line strength and profit weakness had two clear drivers. First, as reported by ScanX.trade, global input cost headwinds hit hard. Crude oil-driven polymer price inflation and higher Red Sea freight costs compressed EBITDA margins.
Second, the consolidated result absorbed a loss from the company's Mexico joint venture, Sayem Knack. Flash Finance noted this JV, in its peak scale-up phase, contributed a net loss of ₹26.15 million in Q2. An exceptional charge for employee benefits also weighed on the profit figure.
The costs that will not fall soon
Management has initiated customer pricing revisions to pass on increased costs, with adjustments expected to reflect in realizations from Q3 FY27 onwards. However, this recovery is subject to market stabilization. The industry backdrop remains challenging, with Business Standard reporting that rising crude-linked packaging costs are squeezing FMCG company margins, limiting their appetite for price hikes.
Internally, the company is funding growth while managing this squeeze. Its balance sheet is liquid post-IPO, with significant cash, but trade receivables have expanded alongside revenue, as noted by Flash Finance.
Key Points
- Knack Packaging achieved record quarterly revenue of ₹294.76 crore in Q2 FY27, up 12.3% from the previous quarter.
- Consolidated profit fell 18% sequentially to ₹25.02 crore, pressured by polymer raw material inflation and a loss from the scaling Mexico joint venture.
- Management expects pricing actions to help restore margins from Q3, but the timeline depends on commodity market stabilization.
- The company maintains a strong liquidity position post-IPO to fund its capacity expansion to 70,000 MTPA by October 2027.
Hexa Perspective
The quarter underscores a classic growth-versus-margin trade-off. Knack Packaging is successfully capturing demand, with revenue growth remaining robust. However, its profitability is currently hostage to volatile input costs and the early-stage losses of an international venture.
The next two quarters will test management's pricing power and operational discipline. If the promised price revisions stick and commodity pressures ease, margins could recover toward the trailing-twelve-month average of 10.5%. If not, strong top-line growth may continue to deliver thinner profits until the new capacity comes online.
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