Seshasayee Paper (SESHAPAPER) Q2 FY27 Profit Soars 89% as Costs Lag Revenue
The paper maker's Q2 profit surged as revenue growth far outpaced input costs, but the industry faces a squeeze from rising raw material prices.
Seshasayee Paper's Q2 profit nearly doubled year-on-year to ₹42.31 crore. The surge was driven by a 45% revenue jump while key input costs rose at less than half that rate, sharply expanding margins.
Seshasayee Paper and Boards delivered a quarter where profitability finally caught up with sales. Revenue jumped 45% from a year ago, but profit soared 89% as the company kept a tight lid on its biggest costs, turning a solid top line into a much stronger bottom line.
The numbers show a clear margin story. Revenue reached ₹503.06 crore, while profit hit ₹42.31 crore. The net profit margin expanded to 8.4%, up 190 basis points from the same quarter last year. Profit also grew 33% sequentially, even though revenue was nearly flat from the June quarter.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Margin
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 503.06YoY +45% | 492.08 | 346.32 |
| Profit (₹ Cr) | 42.31YoY +89% | 31.91 | 22.41 |
| Net Margin | 8.4%YoY +29% | 6.5% | 6.5% |
The cost-control engine
The profit leap was not from selling vastly more paper. According to an analysis by Stockwatch, the cost of materials consumed rose only 18% year-on-year, and power and fuel costs grew 20%. Both were well below the 45% revenue growth. Employee costs grew a modest 8%. This gap between sales growth and input-cost inflation delivered the entire margin expansion.
A stronger financial position
Operational discipline fed into a healthier balance sheet. A report from Scanx.trade notes the company had zero current borrowings as of September end, compared to ₹76.75 crore a year ago. Standalone operating cash flow for the half-year turned positive at ₹39.42 crore, a sharp reversal from an outflow of ₹72.92 crore in the prior-year period.
The coming cost squeeze
The sustainability of these margins is the next question. The industry is facing significant input cost pressure. A Crisil Ratings report cited by Agro Spectrum India expects writing and printing paper margins to expand this fiscal, aided by a softening hardwood cycle. However, other reports point to immediate headwinds.
Seshasayee Paper itself announced a ₹4,000 per tonne price hike in October, citing steep increases in the cost of wood pulp, coal, chemicals, and logistics. The company had warned in July that Q2 margins would face pressure from the West Asian conflict's impact on input costs. The fact that margins expanded instead this quarter suggests effective pricing power, but the full effect of recent cost surges may still be unfolding.
Key Points
- Consolidated profit surged 89% year-on-year to ₹42.31 crore on a 45% rise in revenue to ₹503.06 crore.
- Net profit margin expanded 190 basis points to 8.4%, as key input costs grew at less than half the rate of revenue.
- The balance sheet strengthened with zero current borrowings and positive operating cash flow for the half-year.
- The company announced a price hike in October 2026, responding to rising costs of wood pulp, coal, and chemicals that threaten future margins.
- Planned capacity expansion under Project MDP-IV is expected to be funded through internal accruals, according to a research report.
Hexa Perspective
This quarter showcases the powerful operating leverage in the paper business when sales realizations outrun costs. Seshasayee Paper executed well, converting improved pricing into dramatically higher profits and cash flow.
The test is whether this is a durable reset or a timing advantage. With the company and peers announcing price hikes to counter spiking input costs, the next quarter will reveal if the market can absorb these increases without hurting volumes. The margin expansion story is convincing for now, but its longevity depends on a fragile balance between pricing power and relentless cost inflation.
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