Nath Industries (NATHIND) Q2 FY27' Q2 Profit Slips 14.5% as Costs Swallow a 40% Revenue Surge
The paper and chemicals maker posted a record quarterly revenue of ₹177 crore, but rising input costs and a steep drop in other income squeezed its net profit margin to 2.1%.
Nath Industries' September quarter revenue jumped 39.6% year-on-year to ₹177.33 crore. Yet, net profit fell 14.5% to ₹3.76 crore as margins contracted sharply, highlighting a severe cost squeeze despite strong sales.
For Nath Industries, the September quarter was a story of two diverging lines. The top line surged on robust demand, but the bottom line tells a tale of costs rising even faster, eroding the rewards of growth.
The numbers show the tension clearly. Revenue hit a five-quarter high of ₹177.33 crore, up 39.6% from a year ago and 10.6% sequentially. Yet net profit fell 14.5% year-on-year to ₹3.76 crore, and the net profit margin contracted by 140 basis points to just 2.1%.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 177.33YoY +40% | 160.39 | 127.06 |
| Profit (₹ Cr) | 3.76YoY -15% | 3.85 | 4.40 |
| Net Profit Margin (%) | 2.1YoY -40% | 2.4 | 3.5 |
Where the growth came from
The revenue surge was driven by both core segments. According to data from Equifiz, the chemical segment grew a staggering 147.9% year-on-year, contributing 32.6% of total revenue. The paper segment grew a more modest 7.9%, but still accounted for the majority at 67.4%.
This marks a continued shift in the business mix, with chemicals becoming a larger, faster-growing engine. The company's total expenses rose 38% year-on-year, nearly keeping pace with the revenue jump.
The margin squeeze
Two factors explain why profits fell despite higher sales. First, other income collapsed by 98% to just ₹0.05 crore. In the year-ago quarter, a ₹2.68 crore boost from other income had significantly flattered the bottom line.
Second, input cost inflation bit hard. Interest expense rose 11.4% quarter-on-quarter, reflecting higher working capital needs for the expanded sales base. Reports from peers like Maruti Suzuki cited the West Asia conflict driving up commodity prices, a pressure likely felt across industrial sectors.
The outlook ahead
The industry context offers a mixed picture. A report from Multibagg.ai notes packaging demand supports the paper sector, but import competition and raw-material volatility remain key risks. Kuantum Papers, a peer, expects paper prices to rise 7-11% in the second half of FY27, which could aid realizations.
For Nath, the path to better profitability hinges on managing this volatile cost environment while its chemical segment continues its rapid expansion. The stock has declined 34.6% over the past year, trading at a P/E of 13.9, slightly below the industry average.
Key Points
- Revenue reached a five-quarter high of ₹177.33 crore, driven by 148% growth in the chemical segment.
- Net profit margin contracted to 2.1% as a 98% drop in other income and rising costs offset sales gains.
- The company's business mix is shifting, with chemicals now contributing nearly a third of total revenue.
- Industry peers expect price hikes in the coming quarters, which could ease margin pressure if costs stabilize.
Hexa Perspective
The quarter underscores a classic growth-profitability trade-off. Nath Industries is successfully scaling its chemical business, but the operating model is not yet translating that scale into earnings power. The near-total disappearance of other income removes a past cushion, making core operational efficiency paramount.
The outlook depends on two forces: whether the company can pass on input cost increases in a competitive market, and if the chemical segment's growth can sustain its current momentum. With a trailing-twelve-month net profit margin of just 1%, the margin recovery story has yet to begin.
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