When Ambuja Cements declared its Q2FY26 results, the stock surged over 2 per cent, buoyed by an impressive 364 per cent year-on-year jump in profit. Similarly, Suzlon Energy reported its highest-ever quarterly PAT in 30 years, a staggering 538 per cent YoY increase to Rs 1,279 crore, triggering strong investor enthusiasm. At first glance, both results seem to signal powerful business momentum.
However, a closer look into the financial statements reveals a crucial factor driving these extraordinary profit figures: tax credits, particularly deferred tax adjustments and write-backs. While such credits can temporarily inflate profits, they don’t necessarily represent cash earnings or operational strength, making it important for investors to distinguish between accounting benefits and core business growth.
Understanding the Role of Tax Credits
Tax credits arise when a company can reduce its tax liability due to prior losses, government incentives, or adjustments between accounting profit and taxable income. In India, these often appear as deferred tax assets (DTAs), essentially tax benefits carried forward to offset future liabilities.
When a company reverses or recognises a deferred tax credit, it reduces the tax expense on its income statement, boosting net profit without an equivalent rise in operating income. This accounting mechanism is legitimate under Indian Accounting Standards, but it can distort YoY growth comparisons if investors do not factor in its one-off nature.
Suzlon Energy: Profit Boosted by Deferred Tax Reversal
Suzlon Energy, a leading wind turbine manufacturer, reported a record quarterly net profit of Rs 1,279 crore in Q2FY26, marking a 538 per cent YoY jump from Rs 200.6 crore in Q2FY25. However, this massive surge was primarily driven by a deferred tax credit of Rs 718.18 crore, recorded in the quarter.
Suzlon Energy Quarterly Financial Comparison (Rs crore)
Particulars | Sep 2025 | Jun 2025 | Sep 2024 | QoQ | YoY |
Revenue from Operations | 3,865.54 | 3,117.33 | 2,092.99 | 24% | 85% |
Total Income | 3,897.33 | 3,165.19 | 2,121.23 | 23% | 84% |
Total Expenses | 3,334.83 | 2,705.96 | 1,919.65 | 23% | 4% |
Profit Before Tax | 562.5 | 459.23 | 201.58 | 23% | 179% |
Tax Expense (Credit) | -716.94 | 134.91 | 0.38 | — | — |
Net Profit | 1,279.44 | 324.32 | 200.6 | 295% | 538% |
While Suzlon’s operational revenue showed a healthy rise of 85 per cent YoY, its pre-tax profit grew at 179 per cent. The bulk of the PAT growth came from the Rs 718 crore deferred tax reversal, which turned a normal tax expense into a credit, dramatically inflating net profit.
Excluding this one-time effect, Suzlon’s core earnings performance remains solid, supported by strong execution, lower finance costs and rising wind installation, but far less spectacular than the headline PAT suggests.
Ambuja Cements: Strong Operational Quarter with Tax Write-back Support
Ambuja Cements, part of the Adani Group, reported a PAT of Rs 2,302 crore in Q2FY26, up 364 per cent YoY from Rs 500.66 crore in Q2FY25. Revenue from operations rose 26 per cent YoY to Rs 5,139 crore. However, the standout figure in its financials is a tax credit of Rs 1,103 crore, which significantly boosted the bottom-line profit.
Ambuja Cements Quarterly Financial Comparison (Rs crore)
Particulars | Sep 2025 | Jun 2025 | Sep 2024 | QoQ | YoY |
Revenue from Operations | 9,129.73 | 10,244.11 | 7,304.77 | -11% | 25% |
Total Income | 9,431.53 | 10,545.16 | 7,926.48 | -11% | 19% |
Total Expenses | 8,375.59 | 9,193.48 | 7,028.33 | -9% | 19% |
Profit Before Tax | 837.53 | 1,395.84 | 744.17 | -40% | 13% |
Tax Expense / (Credit) | -1,464.75 | 378.87 | 247.71 | — | — |
Net Profit (PAT) | 2,302.28 | 1,016.97 | 496.46 | 126% | 364% |
The company’s pre-tax profit is 12.50 per cent YoY, but due to a massive tax write-back of over Rs 1,465 crore net profit surged more than 4.5x YoY. This reversal stemmed largely from adjustments related to previous periods and deferred tax recalculations.
While Ambuja’s core business momentum remains robust with record volumes at 16.6 million tonnes, up 20 per cent YoY, the exceptional profit growth headline is largely accounting-driven.
Why Tax Credits Matter and What They Don’t
Tax credits are a timing adjustment, not a permanent income boost. They can arise from:
- Carry-forward of previous years’ losses.
- Differences between depreciation as per books and as per tax laws.
- Government incentives, refunds, or adjustments.
- Correction of earlier overprovisioning or tax disputes.
While these adjustments improve near-term reported profits and may reflect better tax efficiency, they don’t add to cash flows or indicate structural improvements in operating performance.
Investors must therefore assess profit before tax (PBT), EBITDA margins and operational cash flows to gauge real financial health.
The Broader Picture: Core Business Still Solid
Despite the one-off accounting effect, both Ambuja Cements and Suzlon Energy continue to demonstrate improving fundamentals.
Ambuja Cements: Record Revenue and Expansion Momentum
Ambuja Cements reported its highest-ever Q2 revenue of Rs 9,174 crore, up 21 per cent YoY, with cement sales volume rising to 16.6 million tonnes on a consolidated basis, significantly outpacing the industry average. The company’s capacity expansion plans have also been upgraded — its FY28 target has been raised by 15 MTPA, from 140 MTPA to 155 MTPA, aided by low-capex debottlenecking initiatives at just USD 48 per tonne.
Suzlon Energy: Strong Turnaround Continues
Suzlon Energy delivered another strong quarter, reaffirming its turnaround trajectory. The company achieved its highest-ever Q2 India deliveries of 565 MW, supported by solid execution in its wind turbine generator (WTG) business. This operational scale has provided significant operating leverage, leading to an impressive 179 per cent YoY growth in Profit Before Tax (PBT) to Rs 562 crore.
Its order book crossed the 6 GW mark, with over 2 GW additions in H1FY26, underscoring strong future visibility. The company also remains on a firm financial footing, with a net cash position of Rs 1,480 crore as of September 30, 2025, making it one of the few renewable energy manufacturers in India with a debt-free balance sheet. Suzlon continues to hold a dominant position as India’s largest domestic wind equipment manufacturer, with an installed manufacturing capacity of 4.5 GW.
However, the headline PAT numbers overstate the real growth momentum and investors should interpret them with context.
Investor Takeaway and Conclusion
The recent quarterly results of Ambuja Cements and Suzlon Energy highlight an important lesson for investors: not all profit growth stems from core operations. In both cases, deferred tax assets and write-backs played a significant role in inflating the reported net profit, creating eye-catching year-on-year growth figures that at first glance appear purely operational.
Such tax credits and accounting adjustments are a normal part of financial management and reflect improving balance sheet strength and efficient tax planning. However, they can also distort true profitability trends if viewed in isolation. Analysts typically adjust for these one-off items when evaluating valuation multiples such as P/E or EV/EBITDA, ensuring that the comparison reflects underlying business performance rather than accounting effects.
For retail investors, the key takeaway is clear focus beyond headline profit numbers. Metrics like revenue growth, EBITDA margins, operating cash flows and capacity utilisation offer a far more reliable measure of business health. These indicators reveal whether a company’s earnings power is sustainable, not just temporarily boosted by accounting gains.
Ultimately, a one-time tax credit neither signals weakness nor guarantees long-term strength. What truly matters is consistent operational execution, prudent capital allocation and transparent reporting. As India’s industrial and clean energy sectors advance into their next phase of growth, both Ambuja and Suzlon remain strategically positioned, but their real strength will continue to be judged by how effectively they convert opportunities into sustainable earnings, not just headline profits.
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When Big Numbers Hide a Bigger Story: How Tax Credits Boosted Q2 Profits for Ambuja Cements and Suzlon Energy