Swan Defence and Heavy Industries Ltd (SWANDEF) Q2 FY27 Results Analysis: Tax Write-Back Lifts PAT, Revenue Jumps 74%

Swan Defence and Heavy Industries Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 6,884.65 Cr (+74.00% YoY) and PAT growth of -25.90% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Revenue grew 74% YoY to Rs.6,884.65 Cr, but reported PAT of Rs.56,710.44 Cr (EPS Rs.107.65 vs −Rs.0.19) was entirely a one-time Rs.56,315.17 Cr tax provision write-back, with normalized PAT of Rs.395.27 Cr (normalized EPS Rs.0.75) down 25.9% YoY as expenses grew 87.5%. EBITDA stayed negative at −Rs.1,701.96 Cr (−24.7% margin) with finance costs up 748% YoY, while the TOPL amalgamation cut borrowings 58.7% and lifted net worth 29.9% to a 0.51x Debt/Equity. No management guidance exists to benchmark against, and the Svitzer tug order (Rs.251–Rs.750 Cr, deliveries from 2028) is the first disclosed order-book anchor.

Key Investment Insights

Key Positives

• Revenue from operations grew 74% YoY to Rs.6,884.65 Cr, up 124.9% QoQ, on restated post-merger comparatives
• Total borrowings fell 58.7% to Rs.1,14,438.50 Cr, with Debt/Equity improving from 1.59x to 0.51x
• Net worth rose 29.9% to Rs.2,26,198.80 Cr following the TOPL amalgamation capital reorganisation
• EBITDA loss narrowed to −Rs.1,701.96 Cr (−24.7% margin) from −Rs.2,101.43 Cr (−68.7% margin) in Q1 FY27
• Svitzer order for 4 tugs (Rs.251–Rs.750 Cr value bracket, deliveries from 2028) provides the first disclosed order-book anchor
• H1 operating cash flow before working capital changes of Rs.1,176.12 Cr versus −Rs.30,944.70 Cr in FY26

Risk Factors

• Reported PAT of Rs.56,710.44 Cr is entirely a one-time Rs.56,315.17 Cr excess tax provision write-back; normalized PAT is Rs.395.27 Cr
• Normalized PAT declined 25.9% YoY (Rs.533.42 Cr to Rs.395.27 Cr) as total expenses grew 87.5% YoY against 74% revenue growth
• Finance cost of Rs.1,932.10 Cr, up 748% YoY and 14% QoQ, on non-current borrowings of Rs.1,14,438.50 Cr
• EBITDA negative for the third consecutive quarter at −Rs.1,701.96 Cr (−24.7% margin)
• Other income of Rs.5,683.80 Cr (45.2% of total income) dwarfs PBT of Rs.395.27 Cr; operations are loss-making before other income
• Auditor noted three subsidiaries' interim financials were unavailable and associate Conceptia's financials unaudited (both deemed immaterial); associate loss of Rs.66.68 Cr in Q2