Megri Soft (MEGRISOFT) Q2 FY27 Profit Crashes 93% Despite 60% Revenue Surge
A sharp rise in expenses and a reliance on other income turned a strong top-line quarter into a near-zero bottom line.
Megri Soft's Q2 FY27 saw revenue jump 60% year-on-year, but profit collapsed 93% as operating costs surged. The net profit margin shrank to just 1.1%.
For small IT services firms, a revenue jump is often the first sign of a turnaround. Megri Soft posted a 60% year-on-year surge in sales for Q2 FY27, but the celebration was cut short by a 93% plunge in profit. The quarter tells a story of top-line growth completely undone by a cost surge, leaving the core business under severe pressure.
The numbers reveal the disconnect. Revenue climbed to ₹1.07 crore from ₹0.67 crore a year ago. Yet, profit shrank to just ₹0.01 crore. The net profit margin collapsed to 1.1%, down over 21 percentage points from last year.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Period | Sep 2026 | Jun 2026 | Sep 2025 |
| Revenue (₹ Cr) | 1.07YoY +60% | 1.05 | 0.67 |
| Profit (₹ Cr) | 0.01YoY -93% | 0.19 | 0.15 |
| Net Profit Margin (%) | 1.1YoY -95% | 18.3 | 22.6 |
Why the profit vanished
A report from FlashFinance shows the operating profit margin contracted by 2,221 basis points year-on-year. This points to a steep rise in employee and other operational costs that outpaced sales growth. The consolidated business bore the brunt, as standalone results filed separately showed a profit rise.
Furthermore, the quality of earnings weakened. FlashFinance notes that 27% of the pre-tax profit came from other income and one-off items. The core business profit actually fell 57% year-on-year. This means the headline profit figure was flattered by non-operational gains.
A passive strategic stance
This operational squeeze comes amid a passive management phase. An analysis by Stockfin.ai in October noted the company diluted its stake in a key UK subsidiary, ceasing its subsidiary status. The report highlighted a lack of clear plans for product launches, market expansion, or capital allocation for growth.
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· MEGRISOFT
(BSE)
ISIN: INE756R01013
The broader IT services environment offers little relief. IANS reported the sector is facing another muted quarter with soft deal wins, cautious clients, and persistent pricing pressure. For a micro-cap firm like Megri Soft, competing for profitable work in this climate is an added challenge.
Key Points
- Revenue grew 59.7% year-on-year to ₹1.07 crore, but net profit collapsed 93.3% to ₹0.01 crore.
- The net profit margin shrank drastically to 1.1%, down from 22.6% a year ago, due to surging operational expenses.
- About 27% of pre-tax profit came from other income, masking a 57% decline in core business profit.
- Management has shown a passive strategic approach, recently diluting a foreign subsidiary stake with no clear growth roadmap announced.
Hexa Perspective
The quarter frames a critical tension: can Megri Soft convert revenue spikes into sustainable profit? The current cost structure erodes earnings at the first sign of growth, a cycle that cannot continue.
The path forward hinges on either rigorous cost discipline or a strategic shift to higher-margin services. With no debt and a cash-conservative balance sheet, the company has the stability to attempt a pivot. However, without a visible plan from management, the risk is that revenue volatility continues to dictate near-zero profitability.
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