AXISCADES retained revenue rose 55% but H1 loss hit Rs 55.18 crore

AXISCADES Technologies Limited’s retained business grew revenue 55.0% year on year to Rs 378.95 crore in H1 FY27 and accounted for 54% of group revenue, but it reported a Rs 55.18 crore loss after tax as parent transition costs, finance costs, an ESOP charge and impairment exceeded operating earnings.

How quickly did AXISCADES retained business grow?

AXISCADES retained revenue increased 55.0% to Rs 378.95 crore in H1 FY27 from Rs 244.53 crore in H1 FY26, compared with 30.0% growth in consolidated revenue to Rs 705.71 crore. The retained portfolio's contribution to total revenue rose to 54% from 45%, while discontinued operations generated Rs 326.76 crore, up 9.6% from Rs 298.23 crore.

In Q2 FY27, retained revenue was Rs 195.60 crore, up 30% year on year and 7% from Rs 183 crore in Q1 FY27. Retained operations represented 54% of the Rs 359.11 crore group revenue in the quarter, while discontinued operations supplied Rs 163.51 crore before the Phase 1 Akkodis divestment closed on 30 September 2026.

Defence and XIDA drove much of the retained portfolio's expansion in H1 FY27. Defence revenue rose 46.1% to Rs 252.70 crore from Rs 173.00 crore, while XIDA revenue increased 55.4% to Rs 97.90 crore from Rs 63.00 crore; Aerospace recorded Rs 23.10 crore, including Rs 16.50 crore from Cloud Wave's first quarter of consolidation.

Why did AXISCADES retained business make an H1 loss?

AXISCADES retained operations recorded a Rs 55.18 crore loss after tax in H1 FY27, against a Rs 0.97 crore loss in H1 FY26, because continuing operations carried parent costs, higher financing and depreciation charges, a Rs 12.00 crore employee stock option plan charge and a Rs 38.39 crore impairment. Retained profit before tax was a Rs 58.70 crore loss, compared with a Rs 12.05 crore profit a year earlier.

Reported retained earnings before interest, tax, depreciation and amortisation, or EBITDA, declined to Rs 14.96 crore from Rs 26.72 crore, reducing the margin to 3.9% from 10.9%. Before the ESOP charge, retained EBITDA was Rs 26.96 crore, 9.3% below Rs 29.72 crore in H1 FY26, and its margin fell to 7.1% from 12.2%.

Finance costs in retained operations rose 66.4% to Rs 20.69 crore in H1 FY27, while depreciation and amortisation increased to Rs 20.88 crore from Rs 10.31 crore. Retained operating expenses increased 67.1% to Rs 363.98 crore, including an 81.4% rise in materials consumed to Rs 197.49 crore and Rs 10.27 crore of expected credit loss allowances on receivables.

The impairment was non-cash and related to goodwill and intangibles in continuing operations, while the Rs 12.00 crore ESOP charge was booked in Q2 FY27. Separately, group reported profit after tax of Rs 32.54 crore included Rs 87.72 crore of profit after tax from discontinued operations, which reflected the Phase 1 disposal gain and was partly offset by the retained loss.

Which AXISCADES retained businesses generated Q2 EBITDA?

AXISCADES' DRDO/PSU business, XIDA, MoD/OEM programmes and Cloud Wave generated positive Q2 FY27 EBITDA, but the retained parent and Add Solutions offset those contributions. DRDO/PSU and XIDA together produced Rs 28.70 crore of EBITDA on Rs 123.40 crore of revenue, equating to a 23.3% combined EBITDA margin.

DRDO/PSU delivered Rs 75.00 crore of Q2 FY27 revenue and Rs 17.90 crore of EBITDA at a 23.9% margin. XIDA generated Rs 48.40 crore of revenue and Rs 10.80 crore of EBITDA at a 22.3% margin, while Cloud Wave contributed Rs 16.50 crore of revenue, a 42% gross margin and Rs 3.40 crore of EBITDA at a 20.3% margin in its first quarter in the group.

MoD/OEM programmes, identified as ACAT in the entity analysis, produced Rs 52.70 crore of revenue and Rs 4.60 crore of EBITDA in Q2 FY27. AXISCADES said ACAT returned to EBITDA after Q1 provisions, although cost of goods sold was 77% of revenue because of the tank-trailer mix; non-tank-trailer orders had a stated normal cost of goods sold of about 48%.

The Aero Organic parent line recorded negative EBITDA of Rs 26.30 crore and a Rs 49.70 crore loss after tax in Q2 FY27, including the Rs 12.00 crore ESOP charge and Rs 24.20 crore of impairment. Add Solutions, which is under voluntary dissolution, had negative EBITDA of Rs 4.10 crore and a Rs 17.80 crore loss after tax on Rs 2.50 crore of revenue.

What could change AXISCADES profitability after Q2 FY27?

AXISCADES management said the ESOP charge is expected to run at about Rs 6 crore per quarter from Q3 FY27, compared with Rs 12.00 crore booked in Q2 FY27. Management also said the listed parent's corporate overheads of about Rs 12 crore a quarter are subject to a cost reset ahead of the Phase 2 closing and are intended to be absorbed as retained revenue grows.

Legal and professional charges were Rs 14.47 crore in Q2 FY27, driven largely by the divestment, Add Solutions winding-up and acquisitions. Management expects a normal quarterly run rate of Rs 4 crore to Rs 5 crore and said costs should decline by at least Rs 5 crore a quarter as this work completes; the Rs 58.30 crore of exceptional Q2 write-offs were described as non-cash and one-time.

XIDA's restructuring, including the transfer of about 300 engineers into XIDA DeepTech India, is scheduled to complete in Q3 FY27. AXISCADES also expects Space revenue to begin from Q2 FY28, while the business currently costs Rs 2 crore per quarter within corporate overheads.

Management's internal Power 930 aspiration states that Defence, XIDA and Aerospace are planned to operate at about 20% EBITDA margin at division level from Q3 FY27. AXISCADES describes that aspiration as forward-looking and not guidance, and Phase 2 divestment proceeds are expected in February 2027 after the previously expected end-November timing was revised.

Conclusion

AXISCADES has shifted its revenue mix toward the retained portfolio, which grew faster than the group and represented 54% of H1 FY27 revenue. Defence, XIDA, Cloud Wave and MoD/OEM programmes generated positive Q2 EBITDA, but parent costs, the one-quarter ESOP charge, impairment, finance costs and depreciation resulted in a Rs 55.18 crore retained loss after tax for the half year.

The next disclosed milestones are the Q3 FY27 completion of XIDA's restructuring and the expected February 2027 closing of Phase 2 of the Akkodis divestment. Management's stated cost reset, the expected reduction in ESOP and legal costs, and the planned start of Space revenue from Q2 FY28 are the remaining disclosed factors that could affect the portfolio's reported profitability.