Riddhi Display (RDEL) Q2 FY27 Profit Plunges 91% as New Plant Costs Bite
A new manufacturing facility sent depreciation soaring, eroding margins even as revenue held steady in the September quarter.
Riddhi Display Equipments saw its net profit collapse by 91% year-on-year to ₹0.3 crore in Q2 FY27. While revenue was nearly flat, a surge in employee costs and depreciation from a new plant crushed profitability.
For Riddhi Display Equipments, a recent expansion has come with a steep near-term cost. The company's new Lucknow manufacturing facility, which commenced operations in July, is now fully reflected in its financials, sending fixed costs soaring while sales remained stagnant.
The September quarter saw revenue hold at ₹14.37 crore, nearly unchanged from last year. Profit, however, collapsed to just ₹0.3 crore, down 91% year-on-year and 74% from the previous quarter. The net profit margin shrank to 2.1%, a dramatic drop from 22% a year ago.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ2 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|
| Revenue (₹ Cr) | 14.37YoY -0.8% | 14.48 |
| Profit (₹ Cr) | 0.30YoY -91% | 3.19 |
| Net Profit Margin | 2.1%YoY -90% | 22.0% |
The costs that will not fall soon
Two fixed-cost items explain the entire profit erosion. According to a report by ScanX, employee benefit expenses nearly doubled year-on-year. More significantly, depreciation and amortization expense jumped 342% to ₹1.06 crore.
This surge is directly tied to the capitalisation of the new Lucknow plant. The asset base expanded, and with it, the quarterly depreciation charge—a cost that will persist for years. A one-time tax provision of ₹0.34 crore, noted by ScanX, provided a final hit to the bottom line.
A wait for revenue to catch up
The strategic bet is that this new capacity will eventually drive growth in a market showing promise. Reports from IndexBox forecast the Indian furniture and fixtures market to grow 8-10% annually through 2035, driven by retail expansion and urbanization.
Yet, Riddhi Display's management has provided no forward-looking guidance on when revenue might leverage this new capacity. An analysis by StockFin.ai describes the company as being in a “stable, mature phase with no active growth initiatives disclosed,” highlighting a lack of strategic commentary.
Key Points
- Net profit fell 91% year-on-year to ₹0.3 crore on nearly flat revenue of ₹14.37 crore.
- Soaring depreciation from a new manufacturing plant and higher employee costs crushed margins.
- Management has offered no public guidance on when the new capacity will translate to sales growth.
- The stock trades at a significant discount to the industry, with a P/E of 5.2 versus the sector average of 54.6.
Hexa Perspective
This quarter lays bare the classic tension of a capacity expansion: costs arrive immediately, while revenue benefits are deferred. The 91% profit drop is severe, but partly structural due to the new depreciation run-rate.
The investment case now hinges entirely on execution. Investors are paying a deep discount—a 90% discount to the industry P/E—for a company that must prove its new plant can win orders in a growing market. Until sales momentum appears, the margin squeeze is the story.
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