Prozone Realty consolidated PAT falls 65% YoY to ₹1.3 Cr on margin compression

Prozone Realty's consolidated net profit for Q1 FY27 (quarter ended June 30, 2026) fell 65.5% year-on-year to ₹1.30 Cr from ₹3.78 Cr, and was down 66.6% sequentially from ₹3.91 Cr in Q4 FY26. This came despite combined revenue (continuing 'Outright Sales' plus the now-discontinued leasing segment) growing 32.8% YoY to ₹50.76 Cr from ₹38.24 Cr, though revenue slipped 3.4% quarter-on-quarter from ₹52.57 Cr. Net margin compressed sharply to 2.5% from 9.2% a year ago and 6.4% last quarter. The profit decline has two distinct drivers. First, pre-tax profit (PBT, including a ₹0.21 Cr share of joint-venture profit) fell a comparatively smaller 42.5% YoY to ₹3.92 Cr — nearly flat quarter-on-quarter (₹4.03 Cr in Q4FY26) — so the sharper PAT drop is mostly a tax-rate effect: the effective tax rate jumped to roughly 67% this quarter versus 44.6% a year ago and just 3% in Q4FY26, when a large net tax credit in the continuing-operations line had flattered that quarter's profit. Second, within PBT itself, the continuing Outright Sales (residential) segment's pre-tax loss widened to ₹6.83 Cr from ₹4.28 Cr YoY, driven by finance costs more than doubling to ₹1.41 Cr (+102% YoY) and employee costs up 156% YoY to ₹0.99 Cr; the leasing segment — now reported as discontinued operations pending its sale — held nearly flat at ₹10.75 Cr PBT versus ₹11.10 Cr YoY, so it was not the source of the margin compression. The leasing segment's discontinued-operations tag reflects the Board's April 28, 2026 approval to divest Alliance Mall Developers Co. and Empire Mall (the Group's two mall-operating subsidiaries) to Inorbit Malls (India) Pvt Ltd; shareholders cleared the sale by postal ballot on June 1, 2026, and completion conditions remain pending as of this filing. Separately, the standalone (holding-company-only) entity's revenue jumped to ₹8.40 Cr from ₹2.17 Cr YoY and PAT more than tripled to ₹1.58 Cr from ₹0.50 Cr — plausibly linked to the quarter's run of subsidiary-stake purchases (Downtown Retail, FVDPL, Mjs Gajaanan Property, and moving to full ownership of Hagwood Commercial), though the filing does not itemize the source of standalone income. The Company issued no press release or management commentary alongside this filing, and our records carry no prior guidance or concall read for Prozone Realty to check the print against — management gives no formal guidance on record. A web search for consensus estimates found no analyst coverage of this stock for the quarter, consistent with its thin institutional following, so both vs-guidance and vs-street are marked unknown rather than assumed met. Going into Q2 FY27, the leasing segment's ₹10.75 Cr quarterly PBT contribution is set to leave the consolidated P&L once the Inorbit Malls sale completes, which will make the currently loss-making Outright Sales segment's trajectory — and whether the new subsidiary stakes convert into revenue-generating inventory — the swing factor for group profitability.