Arka Financial Services segment result fell 82% in Q2 FY27

Arka Financial Services reported an 82% year-on-year fall in Q2 FY27 segment result to Rs 6.1 crore, while assets under management, or AUM, reached Rs 7,781 crore on 30 September 2026. Revenue declined 11% to Rs 208.6 crore, and the financial-services entity reported consolidated profit after tax of Rs 4.4 crore for the quarter.

Why did Arka's segment result fall in Q2 FY27?

Arka's segment result fell because both revenue and the reported result were below the prior-year quarter, although the presentation does not identify an operating cause. The result was Rs 6.1 crore in Q2 FY27, down from Rs 33.5 crore in Q2 FY26 and Rs 9.4 crore in Q1 FY27, representing an 82% year-on-year decline and a 36% sequential decline.

Financial-services revenue was Rs 208.6 crore in Q2 FY27, compared with Rs 235.6 crore a year earlier and Rs 210.4 crore in Q1 FY27. For H1 FY27, revenue declined 3% to Rs 419 crore from Rs 430.6 crore in H1 FY26, while segment result dropped 67% to Rs 15.4 crore from Rs 47.2 crore.

The segment result and consolidated profit after tax are different measures. The presentation defines financial-services segment result as profit or loss before exceptional items and tax, after interest, while Arka's consolidated profit after tax was Rs 4.4 crore in Q2 FY27 and Rs 11.4 crore year to date.

How did Arka's AUM and loan book change?

Arka's AUM rose to Rs 7,781 crore on 30 September 2026, from Rs 7,651 crore in Q1 FY27 and Rs 7,558 crore in Q2 FY26. This was a sequential increase of Rs 130 crore and a year-on-year increase of Rs 223 crore. AUM excludes treasury assets and includes the off-balance-sheet loan book of Arka Fincap Ltd.

Arka's on-balance-sheet loan book moved differently, reaching Rs 5,754 crore in Q2 FY27. It increased by Rs 235 crore from Rs 5,519 crore in Q1 FY27, but remained Rs 77 crore below Rs 5,831 crore in Q2 FY26. The presentation defines this measure as the on-balance-sheet loan book of Arka Fincap Ltd.

AUM in Q2 FY27 was below the Rs 7,947 crore reported in Q4 FY26, but above the other four quarterly readings shown in the presentation. Management said its drive to grow secured granular retail business continues, without setting a numerical AUM or loan-book target.

How much debt and capital did Arka report?

Arka reported total debt of Rs 5,332 crore and unencumbered treasury assets of Rs 935 crore as of 30 September 2026. Debt and AUM should not be treated as directly comparable because AUM includes off-balance-sheet lending and excludes treasury assets; the presentation gives no earlier debt balance for comparison.

The debt-to-equity ratio was 3.9 times on 30 September 2026, compared with 4.0 times on 30 September 2025. Kirloskar Oil Engines, or KOEL, reported a total investment of Rs 1,053 crore in AFHPL at the same date, including Rs 53 crore of profit from a holding-structure change.

The Rs 53 crore holding-structure profit is separately disclosed from Arka's quarterly operating measures. The presentation does not state that it was included in the Rs 208.6 crore financial-services revenue, Rs 6.1 crore segment result or Rs 4.4 crore consolidated profit after tax reported for Q2 FY27.

How did Arka compare with KOEL's other segments?

Arka was the only reported operating segment with lower Q2 FY27 revenue than a year earlier. Financial-services revenue fell 11% to Rs 208.6 crore, whereas business-to-business, or B2B, revenue rose 20% to Rs 1,745.3 crore and business-to-consumer, or B2C, revenue increased 28% to Rs 330.2 crore. KOEL's consolidated revenue from operations rose 17% to Rs 2,284 crore.

Arka contributed Rs 6.1 crore of Q2 FY27 segment result, compared with Rs 147.6 crore from B2B and Rs 22.9 crore from B2C. B2B result declined 10% from Rs 163.2 crore, while B2C result increased 26% from Rs 18.2 crore; Arka's 82% fall was the largest percentage reduction among the three operating segments.

KOEL's consolidated profit after tax from continuing operations was Rs 130.3 crore in Q2 FY27, down 18% from Rs 159.2 crore in Q2 FY26. Its profit-after-tax margin from continuing operations declined to 5.7% from 8.2%, alongside the lower financial-services result and lower B2B segment result.

Conclusion

Arka ended Q2 FY27 with AUM of Rs 7,781 crore and a loan book that had recovered from Q1 FY27, but revenue and profitability were lower than a year earlier. The Rs 6.1 crore segment result declined more sharply than the 11% revenue reduction, while debt stood at Rs 5,332 crore and the debt-to-equity ratio was 3.9 times.

The next results will show whether management's stated drive to grow secured granular retail business changes the composition or pace of AUM growth. They will also provide the next comparison for the Rs 15.4 crore H1 FY27 segment result, the Rs 5,754 crore loan book and the 3.9-times debt-to-equity ratio.