Avax posted a 56% sequential revenue jump in Q2 FY27, yet net profit fell 7% as expenses outpaced sales growth. The margin squeeze highlights the cost pressures facing the apparel sector.
For Avax, a maker of knitted apparel, the September quarter was a story of strong demand meeting stubborn costs. Revenue leapt 56% from the prior quarter and 65% from a year ago, but the bottom line could not keep pace, with profit dipping sequentially as margins compressed.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
Metric
CurrentQ2 FY27
Same quarter LYQ2 FY26
Period
Sep 2026
Sep 2025
Revenue (₹ Cr)
33.36YoY +65%
20.20
Profit (₹ Cr)
1.64YoY +37%
1.20
Net Profit Margin (%)
4.9YoY -17%
5.9
The business is almost entirely its knitted apparel line, which MarketPing notes contributed 99.8% of segment revenue a year ago. This core division drove the top-line surge, likely benefiting from seasonal demand.
Why the profit didn't follow sales
Expenses grew even faster than revenue, rising 67.7% year-on-year. Reports Radar notes this was driven by a near-doubling in purchases of stock-in-trade and a 137.7% jump in finance costs. Employee and other expenses also rose significantly.
The result was a sharp 340 basis point sequential contraction in net profit margin. Profit after tax of ₹1.64 crore was below the ₹1.77 crore earned in the prior quarter, despite revenue being over ₹12 crore higher.
The cost pressure is industry-wide
The squeeze is not unique to Avax. The Economic Times reports India's apparel production fell 5.6% in H1 FY27, weighed down by weak US demand and high raw material costs. For a firm like Avax, navigating these input costs while managing working capital tied up in rising inventories is the immediate challenge.
Reports Radar states inventories increased by ₹9.13 crore in the half year, tying up capital. With finance costs more than doubling, the cost of funding that growth is now a visible drag on profitability.
Key Points
Revenue surged 56% quarter-on-quarter to ₹33.36 crore, demonstrating strong demand for Avax's knitted apparel products.
Net profit fell 7% sequentially to ₹1.64 crore as total expenses outpaced revenue growth, compressing the net profit margin by 340 basis points.
Rising finance costs, which more than doubled year-on-year, and a significant build-up in inventory have pressured working capital and profitability.
The company trades at a P/E of 14.3, a significant discount to the industry average of 45.1, reflecting market concerns over margin sustainability.
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Hexa Perspective
The quarter reveals a business growing sales but struggling to convert that into earnings. The margin compression from 8.3% to 4.9% in just six months is steep, and the doubling of finance costs suggests growth is being funded at a higher cost.
The valuation discount to the industry is pronounced, but it mirrors the profitability challenge. For the stock to re-rate, Avax needs to demonstrate it can hold or expand margins from this lower base, even as the broader apparel sector grapples with cost inflation and demand volatility.
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Frequently asked questions
What were Avax's Q2 FY27 results?
For the quarter ended September 2026, Avax reported revenue of ₹33.36 crore, up 65.1% year-on-year. Net profit was ₹1.64 crore, a 36.7% increase from the same quarter last year but a 7.3% decline from the previous quarter ended March 2026.
Why did Avax's Q2 FY27 profit fall despite higher sales?
Avax's Q2 profit fell 7.3% sequentially because total expenses rose faster than revenue, compressing margins. Reports Radar notes expenses grew 67.6% against 65.1% revenue growth, driven by higher purchases and a 137.7% jump in finance costs.
What was Avax's net profit margin in Q2 FY27?
Avax's net profit margin was 4.9% for the September 2026 quarter. This represents a contraction of 340 basis points from the 8.3% margin in the prior quarter ended March 2026.
Which business segment contributed more to Avax's Q2 FY27 revenue growth?
The knitted apparel business contributed nearly all of Avax's revenue. According to MarketPing, knitted clothes generated 99.8% of segment revenue in the year-ago quarter, making it the clear driver of the 65% year-on-year sales growth.
Why did Avax's interest expense increase 144% year-on-year in Q2 FY27?
Avax's interest expense more than doubled due to higher borrowings. Reports Radar states finance costs rose 137.7% to ₹0.22 crore. MarketPing notes the company had net debt of ₹3.54 crore as of March 2026, indicating it is not debt-free.
Did Avax provide any guidance for the rest of FY27?
The research snippets do not contain specific revenue or margin guidance from Avax management for the remainder of FY27 following the Q2 results announcement.
What is the demand outlook for India's knitted apparel sector?
The sector faces headwinds. The Economic Times reports India's apparel production fell 5.6% in H1 FY27 due to weak US demand and high raw material costs, indicating a challenging environment for exporters and manufacturers.
Did Avax's Q2 FY27 results beat analyst estimates?
The available research does not specify analyst estimates for Avax's Q2 FY27 revenue or profit, so a comparison to estimates cannot be made.
Have any brokerages changed their rating on Avax after the Q2 results?
The research indicates no Wall Street firm has published a rating or price-target change on the stock in the past 90 days, suggesting limited immediate institutional reaction to the quarterly numbers.
How did Avax's stock price react to the Q2 FY27 results?
The provided research snippets on stock performance refer to a different US-listed company named 'Avax One Technology'. There is no specific information on the price reaction for Avax Apparels and Ornaments Limited (BSE: 544337) following its Q2 FY27 results.
What are the key raw material costs for Avax's business?
As a knitted apparel manufacturer, key raw materials include cotton and polyester yarn. The Economic Times reports that polyester yarn spreads are at a five-year high, while cotton yarn prices have also been firm, indicating sustained cost pressure.
Is Avax planning any capacity expansion?
The research snippets do not mention any specific capacity expansion or new product launch plans for Avax's apparel or ornaments business following the Q2 FY27 results.
Avax Q2 FY27 results summary
Avax's Q2 FY27 summary shows standalone revenue of ₹33.36 crore and net profit of ₹1.64 crore for the quarter ended September 2026. Year-on-year revenue grew 65.1% and profit grew 36.7%, but profit declined 7.3% from the previous quarter.
Avax H1 FY27 revenue
For the half year ended September 2026, Avax reported standalone revenue from operations of ₹33.36 crore, according to Reports Radar. This represents growth of 65.1% over the ₹20.20 crore reported in H1 FY26.
