Canarys Automations H1 profit drops 29% as margin contracts

Canarys Automations Limited reported consolidated profit after tax of Rs 6.44 crore for the half year ended September 30, 2026, down 29% from Rs 9.09 crore a year earlier, as revenue from operations declined 2% to Rs 97.97 crore and operating margin after share-based payment expense fell to 9.56% from 12.69%.

How did Canarys Automations perform in H1 2026?

Canarys Automations recorded total income of Rs 98.78 crore in the half year ended September 30, 2026, compared with Rs 101.71 crore in the corresponding half year of 2025. Revenue from operations was Rs 97.97 crore versus Rs 101.20 crore a year earlier, while other income rose to Rs 80.35 lakh from Rs 50.96 lakh.

Profit before tax fell 26% to Rs 8.96 crore from Rs 12.08 crore. Current tax declined to Rs 2.14 crore from Rs 2.99 crore, while deferred-tax expense was Rs 37.99 lakh against Rs 33,000 in the prior-year period, resulting in consolidated profit after tax of Rs 6.44 crore.

Profit attributable to the owners of Canarys Automations was Rs 6.07 crore in the six months to September 30, 2026, compared with Rs 9.09 crore a year earlier. The results also show Rs 37.24 lakh attributable to minority interest, while basic and diluted earnings per share were both Rs 1.05, against Rs 1.20 in H1 2025.

Why did Canarys Automations' operating margin decline?

Canarys Automations' reported operating margin after share-based payment expense declined by 3.13 percentage points to 9.56% in H1 2026 from 12.69% in H1 2025. Its reported net profit margin after share-based payment expense similarly decreased to 6.52% from 8.94%, alongside the decline in profit after tax to Rs 6.44 crore.

Purchases increased 4% year on year to Rs 46.13 crore from Rs 44.38 crore. Inventory movement became an expense of Rs 1.50 crore after a Rs 3.71 crore reduction in the prior-year period, while total expenses edged up to Rs 89.62 crore from Rs 89.24 crore despite lower employee-benefit expense.

Employee-benefit expense, excluding employee stock option plan costs, fell to Rs 30.47 crore from Rs 36.25 crore in H1 2025. Share-based payment expense also declined to Rs 19.48 lakh from Rs 39.39 lakh, but these reductions did not offset the changes in purchases and inventory movement against a lower revenue base.

On a sequential comparison, revenue from operations rose to Rs 97.97 crore from Rs 96.94 crore in the half year ended March 31, 2026. Profit after tax was Rs 6.44 crore, compared with Rs 5.74 crore in that preceding half year, which included Rs 2.56 crore of exceptional items and reported profit before tax of Rs 7.65 crore.

Which Canarys Automations segments changed in H1 2026?

Canarys Automations' Water Resource Management Solutions revenue increased to Rs 10.00 crore in H1 2026 from Rs 2.00 crore in H1 2025. The segment reported a Rs 1.08 crore profit, compared with a Rs 50.88 lakh loss a year earlier, reversing the disclosed segment result.

Non-AI Technology Solutions revenue declined to Rs 80.05 crore from Rs 99.20 crore in the prior-year half. AI Solutions generated Rs 9.82 crore of revenue in H1 2026, and its disclosed segment result was Rs 1.23 crore; the filing does not provide a prior-period AI Solutions revenue figure in the segment table.

The segment statement reported gross segment revenue of Rs 99.87 crore before eliminating Rs 1.90 crore of inter-segment revenue. That reconciliation produced net sales and income from operations of Rs 97.97 crore, matching the consolidated profit and loss statement for the six months ended September 30, 2026.

Technology Solutions had capital employed of Rs 50.82 crore at September 30, 2026, up from Rs 34.34 crore a year earlier. Water Resource Management Solutions had capital employed of Rs 41.61 crore, compared with Rs 41.70 crore at September 30, 2025, while total capital employed rose to Rs 111.91 crore from Rs 96.19 crore.

What do Canarys Automations' balance sheet and cash flows show?

Canarys Automations had consolidated assets of Rs 153.72 crore at September 30, 2026, compared with Rs 134.18 crore a year earlier. Trade receivables increased to Rs 75.57 crore from Rs 55.59 crore, while inventories declined to Rs 4.53 crore from Rs 9.39 crore.

Cash and bank balances rose to Rs 8.14 crore at September 30, 2026 from Rs 7.36 crore a year earlier. The current ratio was 2.78, compared with 2.65 at September 30, 2025, while short-term borrowings decreased to Rs 9.90 crore from Rs 13.54 crore.

Net cash from operating activities was Rs 62.16 lakh for the six months ended September 30, 2026, compared with net cash used of Rs 48.40 lakh in the corresponding period. Investing cash outflow narrowed to Rs 1.19 crore from Rs 25.02 crore, principally because the prior-year period included Rs 22.55 crore recorded as goodwill on consolidation.

The consolidated results include Canarys APAC PTE Ltd, Canarys Corp, Fortira Inc. and the Canarys-Hanuka APO Technologies Private Limited joint venture. The auditor said interim information for subsidiaries and the joint venture, representing Rs 153.72 crore of assets and Rs 97.97 crore of revenue for H1 2026, had not been reviewed or audited by their auditors; its limited-review conclusion was not modified on this matter.

Conclusion

Canarys Automations' H1 2026 figures show that a Rs 3.23 crore year-on-year reduction in operating revenue was accompanied by a Rs 2.65 crore decline in consolidated profit after tax. Water Resource Management Solutions added Rs 10.00 crore of revenue and turned profitable, but this did not fully offset the fall in Non-AI Technology Solutions revenue to Rs 80.05 crore and the reduction in reported operating margin to 9.56%.

The next disclosure should clarify whether margins and cash conversion change as purchases were Rs 46.13 crore and trade receivables stood at Rs 75.57 crore on September 30, 2026. Readers can also watch the separately disclosed Technology Solutions and Water Resource Management Solutions results, as well as whether future consolidated information continues to rely on management-provided interim data for subsidiaries and the joint venture.