Aarvi Encon Limited (NSE: AARVI) declared a final dividend of ₹2 per equity share for the fiscal year ended March 31, 2026, during its 38th Annual General Meeting held on August 14, 2026. The declaration follows a strong financial performance for FY26, with consolidated revenue from operations rising 27% to ₹649.85 crore from ₹510.39 crore in the prior year.

Profitability metrics improved significantly alongside top-line growth. EBITDA increased to ₹24.93 crore from ₹15.86 crore, while Profit Before Tax (PBT) rose to ₹19.93 crore from ₹11.22 crore. Profit After Tax (PAT) grew 76% to ₹17.62 crore, up from ₹10.04 crore, resulting in a Basic Earnings Per Share (EPS) of ₹11.90. The company’s Net Worth strengthened to ₹137.29 crore, supported by improved operating cash flows and efficient working capital management.

Financial Performance Breakdown

International Expansion Drives Growth

International operations were a key growth driver, with revenue from overseas business surging 73% year-on-year. Profit After Tax from international segments increased by 179%. During FY26, Aarvi Encon strengthened its presence in the United Arab Emirates and Indonesia, established a new office in Malaysia, and expanded operations across Qatar, Oman, and Saudi Arabia.

Specific revenue contributions from key international markets included:

• United Arab Emirates: ₹37 crore revenue with profit margins of 18-19%.
• Indonesia: ₹31 crore revenue with marginal profits (approx. 1%).
• Qatar: ₹6 crore revenue with marginal losses.
• Saudi Arabia & Oman: Revenue yet to materialize significantly, with management hopeful for future contributions.

Strategic Outlook and Operational Metrics

Executive Director and CFO Jaydev Sanghavi outlined the company’s long-term vision to achieve a balanced portfolio comprising approximately 60% India Staffing Services, 20% India Operation & Maintenance (O&M) Services, and 20% International Business. This diversification aims to strengthen recurring revenues and improve overall profitability.

In India, the company established a new Engineering Office in Chennai, intended to evolve into a dedicated engineering center. It also expanded its footprint in the renewable energy sector by providing technical manpower for solar manufacturing O&M services.

Management provided guidance for FY27, targeting top-line growth in the range of 10% to 15% and PAT growth between 2.5% to 3%. The current manpower strength stands at approximately 8,500 employees, with an average billing rate of ₹65,000 per man-month. The company expects the workforce to grow to between 8,500 and 9,500 employees in the coming fiscal year.

Key Resolutions Passed

Shareholders approved several ordinary business items through remote e-voting, including:

• Adoption of audited standalone and consolidated financial statements for FY26.
• Declaration of a final dividend of ₹2 per equity share.
• Reappointment of Jaydev Sanghavi as a director, replacing his term which expired by rotation.

The statutory auditor’s report contained no qualifications or adverse remarks. However, the secretarial auditor’s report included an observation, which was addressed in the Board Report. Dividends will be credited to shareholder accounts within 30 days of the AGM.

What the Numbers Show

The disparity between domestic and international profitability is notable. While India staffing contributes the bulk of revenue, its EBITDA margin is approximately 3.16%, compared to 3.78% for international operations. However, within the international segment, the UAE market delivers significantly higher margins (18-19%) compared to Indonesia (~1%) and Qatar (marginal loss). This suggests that while international expansion drives volume growth, margin quality varies drastically by geography, with the UAE currently being the most lucrative overseas market.

Aarvi Encon Limited delivered a strong start to FY27, with standalone net profit surging 114% year-on-year to ₹5.87 crore for the quarter ended June 30, 2026. The Mumbai-based technical manpower outsourcing firm saw its consolidated net profit rise 43% to ₹60 crore, underpinned by robust top-line growth despite a contraction in operating margins.

Consolidated operational revenue increased 14% to ₹1,727 crore (₹1,727 million), up from ₹1,513 crore in Q1FY26. Standalone revenue also expanded 15% to ₹154.30 crore. The Board of Directors approved the unaudited financial results at a meeting held on August 12, 2026.

Financial Performance

The company’s profitability improved significantly across both standalone and consolidated structures. Consolidated basic EPS stood at ₹4.04, up from ₹2.84 in the corresponding quarter of the previous fiscal year. Standalone EPS rose to ₹3.95, compared to ₹1.85 in Q1FY26.

*Note: Consolidated total revenue derived from presentation data (Operational Income + Other Income).

Employee benefit expenses, the largest cost component, grew 19% to ₹130.40 crore on a consolidated basis, reflecting the manpower-intensive nature of the business. Total expenses rose 14.9% to ₹1,682 crore. Consequently, consolidated EBITDA fell 8.2% to ₹45 crore, with margins contracting 63 basis points to 2.61% from 3.24% in Q1FY26.

What the Numbers Show

A notable divergence exists between revenue growth and operating profitability. While consolidated operational income rose 14.1% to ₹1,727 crore, EBITDA declined to ₹45 crore from ₹49 crore in Q1FY26. This indicates that cost inflation, particularly in employee benefits, outpaced revenue growth, pressuring margins. However, the bottom line benefited significantly from other income, which surged to ₹30 crore from ₹7 crore in Q1FY26, largely driven by subsidies under the Pradhan Mantri Viksit Bharat Rojgar Yojana (PM-VBRY). This non-operating contribution accounted for approximately 50% of the profit before tax (₹62 crore), highlighting a temporary dependency on government incentives to bolster net profit figures.

Operational Updates

During Q1FY27, Aarvi Encon secured 33 new orders, strengthening revenue visibility. The company’s step-down subsidiary in Indonesia, PT Aarvi Encon Services, won two manpower supply contracts worth approximately INR 159 million and INR 385 million from a leading multinational EPC company.

The firm maintained a high client retention rate of 98%, adding more than 13 new clients during the quarter. Its technical workforce strength stood at approximately 8,500 personnel, with total manpower deputation reaching 8,288 professionals in Q1FY27, compared to 8,272 in FY26.

Business Mix and Clientele

Manpower outsourcing remained the core business, contributing 88% of revenue, followed by Operation & Maintenance (O&M) at 11% and other services at 1%. Industry-wise, Engineering accounted for 31% of revenue, followed by Oil & Gas (30%) and Renewable energy (20%). Geographically, India contributed 89% of sales, while international operations accounted for 11%. Non-PSU clients dominated the revenue mix at 88%, with PSU clients contributing 12%.

Regulatory and Operational Notes

The financial statements were prepared in accordance with Indian Accounting Standards (Ind AS) and subjected to a limited review by statutory auditors Jay Shah & Associates. The company continues to monitor the implementation of the New Labour Codes, which were consolidated effective November 21, 2025. Management noted that costs related to billable employees are contractually recoverable from customers, mitigating incremental impact on the statement of profit and loss.

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