AVRO INDIA LIMITED Stock Analysis

Strong standalone revenue growth, increasing by 17.65% YoY to 242.87 lacs in Q3 FY26 (ended Dec 31, 2025). / Consistent QoQ revenue growth, with standalone revenue from operations up 15.63% from 210.03 lacs in Q2 FY26 to 242.87 lacs in Q3 FY26. / Year-to-date standalone net profit for 9M FY26 grew by 32.32% YoY to 334.37 lacs (vs 252.69 lacs in 9M FY25). / Strategic expansion into recycling with the incorporation of AVRO Recycling Limited on May 14, 2025, contributing to consolidated results.

Significant, unexplained discrepancy in standalone financials for Q3 FY26, where "Profit before exceptional items and tax" is 140.07 lacs but "Profit before tax" is only 40.07 lacs, raising concerns about transparency and earnings quality. / Declining standalone profitability and efficiency, with "Profit for the period" decreasing 12.33% QoQ to 106.83 lacs in Q3 FY26. / Standalone Basic Earnings Per Share (EPS) declined both QoQ (from 0.92 to 0.80) and YoY (from 0.98 to 0.80) in Q3 FY26. / Increased operational costs, with "Cost of materials consumed" as a percentage of revenue increasing QoQ and "Other expenses" rising from 47.12 lacs in Q3 FY25 to 58.94 lacs in Q3 FY26. / Lack of comparative consolidated financial data for previous periods (Note 6), making a comprehensive year-on-year analysis of the combined entity difficult.

Revenue grew 17.5% YoY to ₹2,428.7 lakhs in Q3 FY26 and 11.9% to ₹6,585.8 lakhs for nine months, showing consistent top-line momentum / Other income increased 43% YoY to ₹200.3 lakhs in Q3, with sales commission contributing ₹234.4 lakhs (vs ₹133.1 lakhs prior year), diversifying income sources / Nine-month PAT surged 32.3% to ₹334.4 lakhs from ₹252.7 lakhs, demonstrating strong profit growth ahead of revenue growth / Consolidated results outperform standalone with Q3 PAT of ₹135.6 lakhs (27% higher than standalone) and nine-month PAT of ₹361.6 lakhs, validating subsidiary strategy / Inventory management improved with finished goods inventory reduction of ₹105.7 lakhs in Q3 versus prior period buildup, indicating better working capital efficiency / EPS (diluted) improved to ₹0.75 in Q3 from ₹0.95 prior quarter on standalone basis, with consolidated EPS at ₹1.02 showing strong per-share profitability

Employee benefit expenses jumped 137.7% YoY to ₹151.2 lakhs in Q3 (from ₹63.6 lakhs), significantly pressuring operating margins and signaling potential cost inflation / Finance costs increased to ₹48.2 lakhs in Q3 from ₹41.4 lakhs YoY, suggesting higher debt burden or costlier borrowings / Other expenses surged 25% to ₹589.4 lakhs in Q3 from ₹471.2 lakhs YoY, indicating operational cost pressures across the business / Heavy reliance on other income (₹200.3 lakhs in Q3) relative to operational revenue (₹2,428.7 lakhs) raises sustainability concerns if commission income is non-recurring / Stock-in-trade purchases declined 70.7% to ₹126.3 lakhs in Q3 from ₹430.8 lakhs YoY, potentially limiting future revenue growth if inventory replenishment lags / New Labour Codes notified in November 2025 create regulatory uncertainty, though management currently assesses no material impact

Standalone Q3 FY26 revenue from operations grew to Rs 2,428.70 lakh versus Rs 2,064.35 lakh YoY and Rs 2,100.38 lakh QoQ. / 9M standalone revenue reached Rs 6,695.89 lakh, up from Rs 5,883.09 lakh, showing sustained demand momentum through FY26 YTD. / 9M standalone PAT increased to Rs 334.37 lakh from Rs 252.69 lakh (about 32% growth), with EPS (basic) at 2.51 versus 2.45 in the prior comparable period. / Consolidated Q3 FY26 PAT was Rs 135.57 lakh with total comprehensive income of Rs 135.53 lakh, indicating limited OCI volatility in the quarter. / No exceptional item hit the current quarter/nine-month period, and both standalone and consolidated limited-review reports were unmodified; the company also reported zero investor complaints during the quarter.

Earnings quality is a major concern: standalone Q3 other income (Rs 240.30 lakh) exceeded PBT (Rs 140.07 lakh), implying weak core profitability before non-operating/supporting income. / Sales commission within other income is large and rising (Rs 234.42 lakh in Q3; Rs 455.20 lakh in 9M), increasing dependence on this line for reported profit. / Profitability softened sequentially despite revenue growth: standalone PAT fell from Rs 122.08 lakh in Q2 to Rs 106.83 lakh in Q3, and PBT declined from Rs 146.16 lakh to Rs 140.07 lakh. / The business is reported as a single operating segment under Ind AS 108, which increases concentration risk and limits diversification buffers. / Consolidated numbers are first-time presented after subsidiary incorporation, with no prior-period consolidated comparatives, reducing trend visibility and increasing forecasting uncertainty.