Q2FY27 Revenue Growth Misses Estimates as Margin Expansion Supports Operating Profit

Honeywell Automation Q2FY27:

Scorecard: Revenues for Q2FY27 grew by 6.5% to Rs 1,224 crore below our estimates of 10% revenue growth. Operating profit grew by 18% implying an operating margins of 12.7% which improved by 121 bps as in line with our expectations. PAT was up by 12% to Rs 134 crore below our expectations of Rs 145 crore. Working capital stretch dragged on cash generation during the first half. Cash flow from operations dropped to Rs 42.5 Cr compared to Rs 241.8 Cr. Order book stands at Rs 3,514 crore. The stock currently stands at expensive valuations of 48.5x earnings which leaves a very less margin of execution error. We remain hold on the stock due to mixed performance and also stretched valuations.