Honda India Power Products Limited Stock Analysis

Revenue from operations increased strongly by 53.9% QoQ (27,040 lakhs in Dec 2025 vs 17,561 lakhs in Sep 2025) and by 32.4% YoY for the quarter (27,040 lakhs in Dec 2025 vs 20,418 lakhs in Dec 2024). / "Outside India" revenue from contracts with customers saw exceptional growth, rising from 1,819 lakhs in Sep 2025 to 8,539 lakhs in Dec 2025. / The significant exceptional item of (1,184) lakhs impacting profitability is explicitly non-recurring, suggesting a healthier underlying operational performance for the current quarter. / The company declared an interim dividend of 35% (Rs. 3.50 per equity share), indicating strong cash generation and a commitment to shareholder returns. / Profit before tax, prior to the exceptional item, demonstrated robust QoQ growth from 1,507 lakhs in Sep 2025 to 3,457 lakhs in Dec 2025.

Reported "Profit for the period" declined YoY by 12.7% for the quarter (1,667 lakhs in Dec 2025 vs 1,909 lakhs in Dec 2024), primarily due to the exceptional item. / Reported basic earnings per share (EPS) also declined YoY for the quarter (16.43 Rs. vs 18.82 Rs.), mirroring the impact of the exceptional item. / Exposure to regulatory changes is evident through the 1,184 lakhs "Statutory impact of new Labour Codes" classified as an exceptional item. / EBITDA margin for the quarter ended Dec 31, 2025, at 14.93%, was slightly lower compared to 15.28% in the corresponding quarter of the previous year (Dec 31, 2024). / The report lacks a comprehensive view of the company's financial health, specifically details on debt levels, cash flow generation, and overall liquidity.

Strong Q3 revenue growth of 32.4% YoY to Rs. 27,040 lakhs, driven by both domestic (7.3% YoY growth to Rs. 18,169 lakhs) and export acceleration (160.5% YoY growth to Rs. 8,539 lakhs) / Robust operating performance with profit before exceptional items at Rs. 3,457 lakhs in Q3 FY26, up 34.3% YoY from Rs. 2,574 lakhs, indicating healthy underlying business momentum / Improved inventory management with positive change in inventories of Rs. 2,240 lakhs in Q3 vs negative Rs. 17 lakhs in Q3 FY25, suggesting better demand-supply alignment / Debt-free operations with negligible finance costs of Rs. 4 lakhs in Q3 FY26, providing financial flexibility and minimizing interest burden / Healthy other income of Rs. 838 lakhs in Q3 FY26 contributing to overall profitability despite being lower than Rs. 1,040 lakhs in Q3 FY25

One-time exceptional charge of Rs. 1,184 lakhs in Q3 FY26 due to new Labour Codes (gratuity Rs. 807 lakhs + compensated absences Rs. 377 lakhs) compressed reported PAT by 12.7% YoY to Rs. 1,667 lakhs despite revenue growth / Nine-month PAT declined 14.8% YoY to Rs. 3,732 lakhs from Rs. 4,378 lakhs despite 14.3% revenue growth, indicating margin compression and regulatory cost pressures / Export revenue volatility with international sales at Rs. 8,539 lakhs in Q3 vs only Rs. 1,819 lakhs in Q2 FY26, suggesting lumpy order book and geographic concentration risk / Other income declined 19.4% YoY from Rs. 1,040 lakhs to Rs. 838 lakhs in Q3, and 10.4% YoY for nine months (Rs. 2,778 lakhs vs Rs. 3,102 lakhs), indicating lower treasury yields or non-operating income streams / Employee benefit expenses increased 6.7% YoY to Rs. 3,567 lakhs in Q3 and 6.5% YoY for nine months to Rs. 10,529 lakhs, with ongoing regulatory changes creating uncertainty around future labour cost inflation / Material cost inflation with cost of materials consumed rising 15.7% YoY to Rs. 11,595 lakhs in Q3 and 19.4% YoY to Rs. 31,521 lakhs for nine months, pressuring gross margins

Q3 FY26 revenue from operations increased to INR 27,040 lakhs from INR 20,418 lakhs (+32.4% YoY), showing strong demand momentum. / Pre-exceptional profitability improved, with Q3 PBT at INR 3,457 lakhs versus INR 2,574 lakhs (+34.3% YoY). / Export revenue from contracts jumped to INR 8,539 lakhs in Q3 versus INR 3,274 lakhs (+160.8% YoY), and to INR 11,941 lakhs in 9M versus INR 6,244 lakhs (+91.2% YoY). / Financing burden remains minimal, with finance costs of only INR 4 lakhs in Q3 and INR 11 lakhs for 9M, indicating low leverage pressure. / Board declared interim dividend of INR 3.50 per share (35% on face value INR 10), signaling confidence in near-term liquidity/profitability.

Reported earnings were hit by a INR 1,184 lakhs exceptional charge in Q3/9M (gratuity INR 807 lakhs and long-term compensated absences INR 377 lakhs), reducing PAT to INR 1,667 lakhs in Q3 (-12.7% YoY). / 9M FY26 PAT declined to INR 3,732 lakhs from INR 4,378 lakhs (-14.8% YoY), and EPS fell to 36.79 from 43.16, which may weigh on valuation rerating. / Regulatory uncertainty remains, as management noted ongoing monitoring of final Central/State Labour Code rules and possible future accounting impact. / Domestic contract revenue growth is modest versus exports (Q3 India INR 18,169 lakhs, +7.3% YoY), creating dependence on faster-growing overseas demand for overall acceleration. / Working-capital signal is mixed: Q3 inventory change swung to an expense of INR 2,240 lakhs versus INR 17 lakhs last year, which can pressure cash conversion if sustained.