SG Mart Ltd (SGMART) Q2 FY27 Results Analysis: Business EBITDA Surges 157%, PAT More Than Doubles

SG Mart Ltd's Q2 FY27 numbers came in strong, with revenue of Rs. 1,561.84 Cr (-8.36% YoY) and PAT growth of +103.54% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

SG Mart delivered its strongest reported profitability with Business EBITDA of Rs.71.99 Cr at a 4.61% margin, meeting management's Rs.70 Cr sequential step and growing 156.9% YoY, while PAT more than doubled to Rs.54.02 Cr. The balance sheet is de-levered with net cash of Rs.698.41 Cr, borrowings nearly extinguished, a CRISIL AA-/Stable upgrade, and self-funded capex with positive FCF. The FY27 guidance of Rs.300–350 Cr Business EBITDA still requires an 18–52% sequential step-up in H2, and revenue remains 8.4% below the year-ago quarter on the deliberate trading exit.

Key Investment Insights

Key Positives

• Business EBITDA of Rs.71.99 Cr (+156.9% YoY, +22.5% QoQ) at a 4.61% margin, exceeding management's Rs.70 Cr sequential step by 2.8%
• Consolidated PAT grew 103.5% YoY to Rs.54.02 Cr; normalized PAT Rs.55.13 Cr after adjusting for the Rs.1.42 Cr ESOP charge
• Business EBITDA margin held above Q1's 4.49% for the first sequential confirmation of margin sustainability; H1 margin 4.56% vs 2.24% YoY
• Current borrowings fell to Rs.15.99 Cr from Rs.231.42 Cr; net cash Rs.698.41 Cr; CRISIL upgraded to AA-/Stable (September 17, 2026)
• H1 CFO of Rs.181.26 Cr was 1.82x PAT; FCF positive at Rs.18.47 Cr despite capex of Rs.162.79 Cr (2.1x prior year)
• Working capital released: NWC down Rs.128 Cr in six months; inventories Rs.217.71 Cr vs Rs.283.59 Cr; receivables Rs.231.09 Cr vs Rs.264.58 Cr
• Finance costs fell 37.4% YoY to Rs.7.23 Cr; other income declined 54.2% YoY to Rs.8.71 Cr as cash deployed into capex, per management's stated glide-path
• TCSPL acquired for Rs.75 Cr (below the Rs.85 Cr approved) with no goodwill; subsidiaries contribute 26.4% of consolidated PAT at higher margins than the parent

Risk Factors

• Revenue declined 8.36% YoY to Rs.1,561.84 Cr on the deliberate trading-mix shift; standalone revenue down 10.05% YoY
• FY27 Business EBITDA guidance of Rs.300–350 Cr requires Rs.84.63–109.63 Cr average per quarter in Q3–Q4, an 18–52% step-up from Q2's Rs.71.99 Cr
• Effective tax rate rose ~184 bps YoY to 21.78%
• Employee costs rose 31.2% YoY and 28.7% QoQ to Rs.10.68 Cr, including a new Rs.1.42 Cr ESOP charge
• Standalone CFO was negative Rs.27.71 Cr in H1, with the parent funding the group build-out