Innovana Thinklabs Q2 profit falls 48% despite revenue rise

Innovana Thinklabs Limited reported consolidated net profit of Rs 6.58 crore for the quarter ended 30 September 2026, down 48% from Rs 12.67 crore a year earlier, despite revenue from operations rising 36% to Rs 44.61 crore. The decline followed a Rs 17.17 crore year-on-year increase in quarterly total expenses.

Why did Innovana Thinklabs’ Q2 profit fall despite revenue growth?

Innovana Thinklabs’ Q2 profit fell because expenses grew by more than the increase in revenue from operations during the quarter ended 30 September 2026. Revenue from operations rose by Rs 11.88 crore year on year to Rs 44.61 crore, while total expenses rose by Rs 17.17 crore to Rs 38.97 crore. As a result, profit before tax declined to Rs 7.37 crore from Rs 15.32 crore.

Digital advertising was a material expense movement. The cost rose to Rs 10.59 crore in Q2 FY 2026-27 from Rs 5.27 crore in Q2 FY 2025-26, an increase of Rs 5.32 crore. Innovana Thinklabs said Astro Services incurred this expenditure mainly for customer acquisition, brand building and growth initiatives through digital platforms.

The company said its Astro business was in a growth and expansion stage, making marketing and promotional spending comparatively higher relative to current revenue. It described the spending as intended to improve brand visibility, expand the customer base, increase market penetration and support long-term revenue generation and scalability. Employee benefits expense also increased to Rs 7.47 crore from Rs 4.85 crore.

How did Innovana Thinklabs’ Q2 results compare with Q1?

Innovana Thinklabs’ revenue from operations increased sequentially to Rs 44.61 crore in Q2 FY 2026-27 from Rs 38.97 crore in Q1 FY 2026-27, while net profit rose to Rs 6.58 crore from Rs 5.54 crore. Profit before tax similarly increased from Rs 6.69 crore in the June 2026 quarter to Rs 7.37 crore in the September 2026 quarter.

The sequential improvement in profit occurred alongside higher total expenses of Rs 38.97 crore, compared with Rs 36.02 crore in Q1. Cost of materials and services declined to Rs 7.96 crore from Rs 8.85 crore, while purchases of stock-in-trade and work-in-progress increased sharply to Rs 14.46 crore from Rs 0.89 crore.

Other income fell to Rs 1.73 crore in Q2 from Rs 3.74 crore in Q1 and Rs 4.40 crore a year earlier. Finance costs were Rs 0.92 crore, lower than Rs 1.74 crore in Q1 but close to Rs 0.95 crore in Q2 FY 2025-26. Innovana Thinklabs’ share of profit from associate companies was Rs 0.59 crore, versus Rs 0.91 crore in the prior quarter.

Basic earnings per share were Rs 3.18 for Q2 FY 2026-27, compared with Rs 2.68 in Q1 and Rs 6.18 in Q2 FY 2025-26. Diluted earnings per share were also Rs 3.18 in the September 2026 quarter, against Rs 6.15 a year earlier. The company said quarterly earnings per share figures were not annualised.

What do Innovana Thinklabs’ first-half results show?

Innovana Thinklabs reported first-half revenue from operations of Rs 83.58 crore for the half year ended 30 September 2026, up 29% from Rs 64.82 crore in the comparable period. Net profit, however, fell 53% to Rs 12.11 crore from Rs 25.79 crore, while profit before tax declined to Rs 14.05 crore from Rs 30.99 crore.

Total expenses for the first half rose to Rs 75.00 crore from Rs 41.05 crore. Digital advertising expense increased to Rs 21.74 crore from Rs 8.14 crore, purchases of stock-in-trade and work-in-progress reached Rs 15.35 crore from Rs 0.09 crore, and employee benefits expense rose to Rs 14.55 crore from Rs 8.79 crore.

Changes in inventories reduced first-half expenses by Rs 10.97 crore, compared with an expense increase of Rs 1.93 crore in the previous-year period. Other income declined to Rs 5.47 crore from Rs 7.22 crore, while finance costs rose to Rs 2.65 crore from Rs 1.83 crore. These movements accompanied the reduction in first-half profit before tax.

What happened to Innovana Thinklabs’ cash flow and balance sheet?

Innovana Thinklabs generated net cash inflow from operating activities of Rs 11.82 crore in the half year ended 30 September 2026, down from Rs 20.38 crore a year earlier. Cash generated from operations declined to Rs 16.86 crore from Rs 22.82 crore, while net income taxes paid increased to Rs 5.04 crore from Rs 2.44 crore.

Working-capital movements included an Rs 11.05 crore increase in inventories, compared with a Rs 1.97 crore decrease in the prior-year half. Other financial assets and other assets increased by Rs 5.75 crore, while trade payables, other financial liabilities and other liabilities increased by Rs 16.05 crore. These items were part of the movement from operating profit before working-capital changes of Rs 17.07 crore.

Total assets stood at Rs 397.52 crore on 30 September 2026, compared with Rs 365.01 crore at 31 March 2026. Total equity increased to Rs 291.45 crore from Rs 279.34 crore, while current liabilities rose to Rs 55.47 crore from Rs 36.81 crore. Current borrowings were Rs 9.76 crore, up from Rs 7.52 crore.

Which businesses and review matters are relevant to the results?

Innovana Thinklabs’ consolidated operations include software development, gym and fitness, construction and infrastructure development, Astro services and game studio activities, and green energy. In Q2 FY 2026-27, gross segment revenue was Rs 17.03 crore for software product sales, Rs 15.38 crore for Astro Services and Game Studio, and Rs 11.43 crore for gym and fitness.

Astro Services and Game Studio reported a segment result loss of Rs 1.82 crore in Q2, compared with a profit of Rs 0.08 crore a year earlier. Software product sales recorded a segment result of Rs 9.37 crore, down from Rs 15.57 crore, while gym and fitness recorded Rs 1.12 crore, up from Rs 0.78 crore. Green Energy reported a segment result of Rs 0.29 crore after a Rs 0.01 crore loss a year earlier.

The board approved the unaudited consolidated results on 14 November 2026 after the audit committee reviewed and recommended them. The statutory auditor issued an unmodified limited review report. Innovana Thinklabs also said no investor complaints were pending as of 30 September 2026.

Conclusion

Innovana Thinklabs delivered a Rs 44.61 crore Q2 revenue-from-operations result, but the Rs 38.97 crore expense base resulted in net profit of Rs 6.58 crore, below Rs 12.67 crore a year earlier. The same pattern appeared in the first half, when operating revenue rose to Rs 83.58 crore but operating cash inflow declined to Rs 11.82 crore.

The next point to watch is whether the Astro Services customer-acquisition, brand-building and market-penetration spending supports the long-term revenue generation and scalability described by Innovana Thinklabs. Digital advertising expense reached Rs 21.74 crore in the half year ended 30 September 2026, while the Astro Services and Game Studio segment recorded a Rs 1.51 crore first-half loss.