SKM Egg Q2FY27: consolidated PAT -28% YoY, margins squeezed by feed-cost inflation

SKM Egg Products' consolidated revenue for Q2 FY27 (quarter ended Sep 30, 2026) was ₹189.84 Cr, down 6.0% YoY from ₹201.93 Cr, though up 3.0% sequentially from ₹184.26 Cr in Q1 FY27. Consolidated net profit fell far more sharply — down 28.3% YoY to ₹17.78 Cr from ₹24.79 Cr, and down 25.4% QoQ from ₹23.83 Cr. Basic EPS was ₹3.37 versus ₹4.70 a year ago and ₹4.53 last quarter. Standalone tells a weaker version of the same story: revenue of ₹184.15 Cr was down 10.7% YoY and PAT of ₹16.11 Cr was down 33.3% YoY (and a similar ~33% QoQ) — a bigger divergence from consolidated than usual, since the subsidiaries (SKM Europe BV, SKM Universal Marketing) cushioned the group number somewhat. The decline traces almost entirely to raw material cost. Cost of materials consumed rose to 64.1% of consolidated revenue (₹121.63 Cr) this quarter, up from 58.9% in Q1 FY27 and 59.1% a year ago — a roughly 5-percentage-point deterioration on both counts, and the reason QoQ revenue growth (+3.0%) still produced a steep profit decline. Operating margin (EBITDA basis) came down to roughly 16.2% from about 16.9% QoQ and 18.5% YoY, and net margin fell to 9.4% from 12.4% QoQ and 12.1% YoY. Employee benefit expense added further pressure, up 29.9% YoY to ₹10.68 Cr (standalone), though roughly flat QoQ. No formal analyst coverage or consensus estimate for this print turned up in search — this is a small-cap with no active brokerage targets on record, so the result cannot be graded against Street expectations. Against management's own July 2026 guidance — "FY27 growth price-led at stable international prices," with "no volume growth runway, capacity fully utilized" — the quarter missed: revenue fell YoY on both bases rather than growing, even as the guided feed-cost pressure did materialize and, notably, has not eased within the "2-3 months" window management flagged on the Q1 call. The ₹400 Cr layer-capacity capex management said it would bring to the board "by Oct" was not among this Oct 23 meeting's approvals — the board approved only the quarterly results and a Scheme of Amalgamation merging wholly-owned subsidiary SKM Universal Marketing Company (India) Pvt Ltd into the parent (no cash consideration, no shareholding change; rationale cited as complementary businesses — egg-powder export manufacturing versus egg trading). Capital work-in-progress did rise to ₹22.25 Cr from ₹6.33 Cr at FY26-end, consistent with capex spend already underway ahead of any formal board sign-off. The branded-eggs push management guided at ₹40-50 Cr revenue this year (margin delayed to FY28+) cannot be checked against this filing — the company reports a single operating segment with no further revenue breakout (Note 5). The company's own communication accompanying this filing was procedural — confirming the results and amalgamation approvals and commending the Chairman & Managing Director's executive-education program — with no quantified claims about quarter performance to reconcile against the numbers. Going into Q3 FY27, the quarter sets up two things to track: whether the ₹400 Cr capex gets formal board approval, and whether the material-cost ratio (64% of revenue, up ~5pp both YoY and QoQ) eases as management previously signaled or persists further into the second half.