AXISCADES writes off Rs 58.3 crore as disposal gain lifts Q2

AXISCADES Technologies Limited recorded Rs 58.3 crore of non-cash legacy asset write-offs in Q2 FY27, while Phase 1 of its divestment generated a Rs 129.30 crore net exceptional gain in discontinued operations. The combination helped produce reported profit after tax of Rs 47.30 crore, although the write-offs did not affect revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), customers, orders or cash, according to AXISCADES.

What did AXISCADES write off in Q2 FY27?

AXISCADES wrote off Rs 58.3 crore of legacy non-core assets in Q2 FY27, comprising a Rs 38.4 crore impairment in continuing operations and a Rs 19.9 crore Epcogen Private Limited goodwill write-off in discontinued operations. AXISCADES classified both charges as exceptional, non-cash and below EBITDA, separating them from operating revenue and EBITDA.

The Rs 38.4 crore continuing-operations impairment covered Add Solutions and legacy holdings. AXISCADES said Add Solutions was a legacy, non-core acquisition for which voluntary dissolution had begun. Its Q2 FY27 profit bridge allocated Rs 14.2 crore of the impairment to Add Solutions and Rs 24.2 crore to legacy overseas holdings.

The Rs 19.9 crore charge was for the remaining goodwill of Epcogen Private Limited, an energy-sector engineering design and solutions business acquired on 1 December 2023. Epcogen transferred with the divested engineering-services business at the Phase 1 closing on 30 September 2026. AXISCADES had previously impaired Rs 7.98 crore of Epcogen goodwill in FY26 before writing off the remaining amount in Q2 FY27.

How did the Phase 1 divestment gain offset the write-offs?

AXISCADES recognised a Rs 129.30 crore net exceptional gain in discontinued operations in Q2 FY27 after Phase 1 of the US$237 million Akkodis transaction closed on 30 September 2026. AXISCADES reported a Rs 140.84 crore disposal gain, including Rs 20.94 crore of foreign currency translation reserve (FCTR) recycled on disposal, less Rs 11.54 crore of Q2 transaction costs.

The presentation places the Epcogen goodwill charge within discontinued operations alongside the disposal. AXISCADES said the Rs 140.84 crore Phase 1 gain was recognised after the Epcogen write-off, while its Q2 profit composition also presents a Rs 149.2 crore pre-Epcogen exceptional gain and a separate Rs 19.9 crore Epcogen charge. The consolidated Q2 statement reported a Rs 129.30 crore discontinued-operations exceptional item.

The retained business recorded a Rs 38.39 crore exceptional loss, substantially representing the Add Solutions and legacy-holdings impairment. The Rs 129.30 crore discontinued gain and Rs 38.39 crore retained loss resulted in Rs 90.91 crore of consolidated net exceptional items. This lifted reported profit before tax to Rs 82.61 crore even though profit before tax before other income and exceptional items was a Rs 12.88 crore loss.

Did the write-offs affect AXISCADES EBITDA or cash?

AXISCADES said the Rs 58.3 crore write-offs were non-cash, below EBITDA and did not affect revenue, EBITDA, customers, orders or cash. AXISCADES also described the charges as one-time items that would not recur. The presentation distinguishes these asset charges from the Rs 12.0 crore employee stock option plan (ESOP) charge recorded in Q2 FY27, which also reduced reported EBITDA.

Reported Q2 FY27 EBITDA was Rs 11.43 crore, or a 3.2% margin on revenue of Rs 359.11 crore. EBITDA before the Rs 12.0 crore ESOP charge was Rs 23.43 crore, equal to a 6.5% margin. Legal and professional charges were Rs 14.47 crore in Q2 FY27, compared with Rs 5.91 crore in Q2 FY26, with management attributing much of the increase to divestment work, Add Solutions winding-up and acquisitions.

Reported Q2 FY27 profit after tax of Rs 47.30 crore compared with Rs 23.13 crore in Q2 FY26 and a Rs 14.76 crore loss in Q1 FY27. The comparison is shaped by the Phase 1 exceptional gain rather than operating performance alone. AXISCADES' disclosed Q2 profit walk showed a Rs 31.6 crore loss from operations before the exceptional items and after Rs 35.3 crore of tax.

How did AXISCADES' revenue mix change after Phase 1?

AXISCADES' retained businesses accounted for Rs 195.6 crore, or 54%, of Q2 FY27 group revenue of Rs 359.1 crore, while discontinued operations accounted for Rs 163.5 crore, or 46%. Retained revenue increased 30% year on year and 7% quarter on quarter. The retained portfolio comprises Defence, XIDA, Aerospace Manufacturing and Space.

For H1 FY27, retained revenue rose 55% to Rs 378.9 crore and represented 54% of total revenue, compared with 45% in H1 FY26. Group revenue increased 30% to Rs 705.7 crore. Defence revenue rose 46% to Rs 252.7 crore, XIDA revenue increased 55% to Rs 97.9 crore, and Aerospace reported Rs 23.1 crore of H1 FY27 revenue.

The accounting split illustrates the impact of the disposal and write-offs. Retained operations reported a Q2 FY27 loss after tax of Rs 48.12 crore, including the Rs 38.4 crore impairment, parent transition costs and the full ESOP charge. Discontinued operations reported Rs 95.43 crore of profit after tax, driven by the Phase 1 disposal gain after the Epcogen write-off.

What costs does AXISCADES expect to change after Q2 FY27?

AXISCADES said the ESOP expense should run at about Rs 6 crore a quarter from Q3 FY27, compared with the full Rs 12.0 crore charge booked in Q2 FY27. Management also said legal and professional costs should move toward a Rs 4 crore to Rs 5 crore quarterly run rate as divestment, winding-up and acquisition work completes, from Rs 14.5 crore in Q2 FY27.

Management stated that the listed parent carried Rs 14.8 crore of corporate cost base in Q2 FY27, calculated as Rs 26.8 crore of parent cost less the ESOP charge. Its plan is a cost reset ahead of the Phase 2 closing, while the retained portfolio scales revenue. These are management expectations rather than reported future results.

Conclusion

AXISCADES used the Q2 FY27 Phase 1 disposal period to remove Rs 58.3 crore of Add Solutions, legacy-holdings and Epcogen assets in a single quarter. The charges were non-cash and below EBITDA, while the Rs 129.30 crore discontinued-operations exceptional gain drove reported Q2 profit after tax of Rs 47.30 crore despite a Rs 12.88 crore loss before other income and exceptional items.

The next disclosed event is Phase 2 of the US$237 million Akkodis transaction, which AXISCADES expects to close by February 2027. Management also expects the ESOP cost to reduce to about Rs 6 crore a quarter from Q3 FY27 and legal and professional costs to normalise to Rs 4 crore to Rs 5 crore a quarter as the related work concludes.