Rajoo Engineers (RAJOOENG) Q2 FY27 Profit Plunges 41% as Capex Costs Bite
The plastic machinery maker's revenue grew 10.5% year-on-year, but a sharp rise in material and employee costs eroded profitability.
Rajoo Engineers' Q2 FY27 profit fell 41% despite higher revenue, as margins were squeezed by rising costs tied to capacity expansion and a loss in its subsidiary.
Rajoo Engineers, a leader in plastic extrusion machinery, is in the midst of a heavy investment cycle. The September quarter shows the strain, with revenue growth failing to keep pace with a surge in costs, leading to a severe profit squeeze.
Consolidated revenue for Q2 FY27 was ₹101.91 crore, up 10.5% from a year ago. Profit after tax, however, fell 41.4% to ₹8.26 crore. The net profit margin contracted by 720 basis points to 8.1%.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 101.91YoY +10% | 123.07 | 92.25 |
| Profit (₹ Cr) | 8.26YoY -41% | 17.35 | 14.10 |
| Net Profit Margin (%) | 8.1YoY -47% | 14.1 | 15.3 |
The margin squeeze explained
A report from StockWatch details the cost pressures. Material costs jumped, consuming 69.7% of revenue compared to 59.7% a year ago. Employee expenses rose 43.9% and depreciation nearly doubled, consistent with a significant capex push.
This paints a clear picture of a capacity-investment-phase squeeze. Costs for new machinery, headcount, and financing are running ahead of the revenue they are meant to support.
A subsidiary's drag and a seasonal dip
The consolidated profit was also weighed down by subsidiary Kohli Printing and Converting Machines, which swung to a ₹1.22 crore loss this quarter. Furthermore, revenue fell 17.2% sequentially from a seasonally strong Q1, as noted by StockWatch.
Management did not issue formal guidance. However, the research points to a key question for the coming quarter: whether the subsidiary can return to profit and if a new Southeast Asia partnership begins to show results.
The company's balance sheet remains strong with low debt, and return ratios like ROE at 19.2% are healthy. Yet, the valuation at a P/E of 17.4 trades at a steep discount to the industry average, reflecting the current profitability concerns.
Key Points
- Consolidated profit fell 41.4% year-on-year to ₹8.26 crore despite a 10.5% rise in revenue.
- Net profit margin contracted sharply by 720 basis points to 8.1%, driven by surging material and employee costs.
- The subsidiary Kohli Printing swung to a loss, dragging consolidated earnings below standalone performance.
- The cost surge is linked to a significant capacity expansion phase, with depreciation and finance costs rising notably.
Hexa Perspective
The quarter reveals the classic tension of an investment cycle: spending today for growth tomorrow, but with a clear near-term hit to earnings. The pressure is operational, with no one-offs to blame.
The path forward hinges on two factors. First, the company's ability to pass on input cost increases or achieve better operating leverage from its new capacity. Second, the integration and turnaround of its recently acquired printing subsidiary. Until these show progress, margin recovery may remain elusive.
Also read
Want this applied to your portfolio?
Talk to a HexaWealth advisor, or sync your mutual fund data for insights tailored to your holdings.