Aarvi Encon Limited Q2 profit falls 26% despite revenue rise

Aarvi Encon Limited reported consolidated profit after tax of Rs 3.57 crore for the quarter ended September 30, 2026, down 26% from Rs 4.80 crore a year earlier, while revenue from operations rose to Rs 160.50 crore from Rs 158.85 crore. The first-half comparison remained positive, with profit after tax increasing to Rs 9.56 crore.

Why did Aarvi Encon’s September-quarter profit fall?

Aarvi Encon’s reported profit after tax declined by Rs 1.23 crore year on year, while profit before tax fell to Rs 4.22 crore from Rs 5.09 crore. Total revenue, comprising revenue from operations and other income, increased to Rs 162.07 crore in the September 2026 quarter from Rs 159.50 crore in the September 2025 quarter.

Employee benefit expense rose to Rs 130.31 crore from Rs 117.91 crore, an increase of Rs 12.40 crore that exceeded the Rs 1.65 crore increase in revenue from operations. Total expenses increased to Rs 157.86 crore from Rs 154.42 crore, reducing the difference between total revenue and expenses.

Tax expense was Rs 64.44 lakh in the quarter, compared with Rs 28.41 lakh a year earlier. Basic earnings per share fell to Rs 2.41 from Rs 3.24, while diluted earnings per share declined to Rs 2.39 from Rs 3.21.

How did Aarvi Encon’s September quarter compare with June?

Aarvi Encon’s September-quarter profit after tax was lower than the Rs 5.99 crore reported in the June 2026 quarter. Profit before tax also declined from Rs 6.24 crore in June to Rs 4.22 crore in September, while total revenue decreased from Rs 175.70 crore to Rs 162.07 crore.

Revenue from operations fell sequentially to Rs 160.50 crore from Rs 172.68 crore, and other income decreased to Rs 1.57 crore from Rs 3.02 crore. Together, those movements reduced total revenue by Rs 13.63 crore between the June and September quarters.

Employee benefit expense was broadly unchanged at Rs 130.31 crore in September against Rs 130.40 crore in June. Other expenses fell to Rs 26.13 crore from Rs 37.79 crore, while finance cost rose to Rs 81.25 lakh from Rs 74.88 lakh and depreciation and amortisation increased to Rs 60.18 lakh from Rs 52.11 lakh.

Aarvi Encon included a Rs 12.50 lakh gratuity provision for the September quarter within employee benefits. The company said it considers these costs contractually recoverable from customers for billable employees and therefore did not identify an incremental effect on profit and loss from that provision.

Did Aarvi Encon’s first-half results improve?

Aarvi Encon’s consolidated revenue from operations increased 7% to Rs 333.19 crore in the half year ended September 30, 2026, from Rs 310.16 crore in the corresponding previous period. Profit after tax rose 6% to Rs 9.56 crore from Rs 9.02 crore, despite the year-on-year decline in the September quarter.

Total revenue for the six months was Rs 337.77 crore, compared with Rs 311.48 crore a year earlier. Profit before tax increased to Rs 10.45 crore from Rs 9.53 crore, while total expenses rose to Rs 327.32 crore from Rs 301.95 crore.

Employee benefit expense for the half year rose to Rs 260.71 crore from Rs 227.63 crore. Other income increased to Rs 4.58 crore from Rs 1.33 crore, including Rs 2.58 crore received under the Pradhan Mantri Viksit Bharat Rozgar Yojana during the period.

Aarvi Encon recorded Rs 71.60 lakh from that payroll-support scheme in the September quarter. It classified the subsidy as other income when there was reasonable assurance of compliance with the scheme conditions and that the grant had become receivable, in line with Indian Accounting Standard 20.

What do Aarvi Encon’s cash flow and balance-sheet figures show?

Aarvi Encon reported net cash generated from operating activities of Rs 8.55 crore for the half year ended September 30, 2026, compared with Rs 5.92 crore in the corresponding prior-year half. Cash and cash equivalents were Rs 14.40 crore at September 30, 2026, compared with Rs 9.17 crore at the beginning of the period.

Total consolidated assets were Rs 248.60 crore at September 30, 2026, versus Rs 236.95 crore at March 31, 2026. Equity attributable to owners of the holding company increased to Rs 149.55 crore from Rs 142.07 crore over the same period.

Current borrowings were Rs 27.84 crore at September 30, 2026, compared with Rs 24.35 crore at March 31, 2026. Goodwill on consolidation increased to Rs 17.11 crore from Rs 16.40 crore, while investment in the equity-accounted joint venture rose to Rs 20.52 lakh from Rs 15.39 lakh.

What review and labour-code disclosures accompanied the results?

Aarvi Encon’s audit committee and board approved the unaudited consolidated results on November 13, 2026. The statutory auditor’s limited-review report said nothing had come to its attention to indicate that the consolidated statement lacked required disclosures or contained a material misstatement.

The consolidated group includes Aarvi Encon (FZE), Aarvi Energy Company LLC and other direct and indirect subsidiaries, alongside two associate entities. PT. Aarvi Encon Services in Indonesia is held through Aarvi Encon (FZE) with a 49% stake, while Aarvi Encon Staffing Services W.L.L. in Qatar is described as a joint venture with a 49% stake.

Aarvi Encon said it provided Rs 25 lakh for gratuity in the half year ended September 2026 under the New Labour Codes. In the year ended March 31, 2026, it had recognised an exceptional Rs 1.48 crore incremental gratuity impact, while an old gratuity provision write-back of Rs 1.14 crore was also recorded.

Conclusion

Aarvi Encon’s September-quarter revenue growth did not translate into higher reported profit, as employee benefit expense increased by Rs 12.40 crore year on year and tax expense rose by Rs 36.03 lakh. The six-month figures show a different outcome, with revenue from operations up Rs 23.03 crore and profit after tax up Rs 53.95 lakh from the corresponding prior-year period.

The next disclosed matter to watch is Aarvi Encon’s assessment of the New Labour Codes, related rules and any accounting guidance. The company said it would continue monitoring implementation developments after providing Rs 25 lakh for gratuity in the first half ended September 2026.