Avon Mercantile reported a net loss of ₹0.99 crore for Q2 FY27, a sharp reversal from a ₹0.26 crore profit last quarter. Revenue grew modestly, but total expenses more than doubled, erasing all profitability.
For a small NBFC like Avon Mercantile, steady interest income from its loan book is the foundation. The September quarter tested that stability against a sudden, overwhelming cost surge that erased profitability.
The numbers show a stark divergence. Revenue from operations grew 4.1% year-on-year to ₹1.27 crore. Yet, the company swung to a net loss of ₹0.99 crore from a profit of ₹0.26 crore just last quarter.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Metric
CurrentQ2 FY27 (Sep '26)
PreviousQ1 FY27 (Jun '26)
Revenue (₹ Cr)
1.27
1.20
Profit (₹ Cr)
-0.99
0.26
The Expense Shock That Erased Profit
The entire story is in the cost line. Total expenses ballooned to ₹2.27 crore, up 139% from the previous quarter. According to a report from ScanX, this was driven by a spike in 'Other Expenses', which jumped to ₹1.35 crore from just ₹0.02 lakh in Q1.
This single, unexplained line item accounted for more than half the quarter's total costs. It turned a period of modest top-line growth into a significant operational loss, with expenses nearly double the company's income.
Liquidity and Leverage in Focus
The loss compounds existing balance sheet pressures. The company's debt-to-equity ratio stands high at 5.96. Cash reserves have dwindled to ₹7.23 lakh as of September end, down from ₹10.75 lakh in March, notes the ScanX report.
Despite the reported loss, the cash flow statement showed a positive ₹6.08 lakh from operations for the quarter. This suggests the loss was driven by non-cash or accrued expenses that strained the income statement but not immediate liquidity.
A Quarter Without Context
No management commentary or outlook was provided with the results to explain the expense surge. The board did appoint a new independent director, but the financial disclosure offers no guidance on whether these costs are one-time or structural.
For now, the sharp profitability reversal from the previous four quarters defines the narrative. Investors are left to question what drove the costs and if the core lending business can regain its footing.
Key Points
Avon Mercantile's Q2 net loss of ₹0.99 crore reversed a ₹0.26 crore profit from Q1.
A 139% quarter-on-quarter surge in total expenses, led by 'Other Expenses', completely offset 4% year-on-year revenue growth.
The company's cash position tightened to ₹7.23 lakh, and it carries a high debt-to-equity ratio of 5.96.
No management rationale or forward guidance was provided to explain the dramatic cost increase.
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Hexa Perspective
The quarter is a clear setback, breaking a streak of four consecutive profitable quarters. The lack of explanation for the expense surge is a concern, making it impossible to judge if this is an anomaly or a new cost reality.
The core lending activity appears stable, with revenue inching up. However, the high financial leverage and thin cash buffer leave little room for error. The investment case now hinges entirely on the nature of these Q2 costs and management's ability to control them going forward.
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Frequently asked questions
What were Avon Mercantile's Q2 FY27 results?
Avon Mercantile reported a net loss of ₹0.99 crore for the quarter ended September 2026 (Q2 FY27). This was a sharp reversal from a net profit of ₹0.26 crore in the previous quarter. Revenue from operations was ₹1.27 crore, up 4.1% from the same quarter last year.
Why did Avon Mercantile's Q2 FY27 profit turn into a loss?
Avon Mercantile's profit turned into a ₹0.99 crore loss because total expenses surged 139% quarter-on-quarter to ₹2.27 crore. A report from ScanX indicates this was primarily due to a massive, unexplained increase in 'Other Expenses', which jumped to ₹1.35 crore from just ₹0.02 lakh in Q1 FY27.
What was Avon Mercantile's revenue in Q2 FY27?
Avon Mercantile's revenue from operations was ₹1.27 crore for Q2 FY27 ended September 2026. This represents a 4.1% increase from the ₹1.22 crore reported in the same quarter last year (Q2 FY26) and a 5.8% increase from the previous quarter (Q1 FY27).
Was Avon Mercantile's Q2 FY27 loss due to a one-time provision?
The results filing does not specify if the loss was due to a one-time item. However, the extraordinary 139% jump in quarterly expenses, largely in an 'Other Expenses' line item as noted by ScanX, suggests a significant non-recurring charge may be involved. The company provided no clarification.
What is Avon Mercantile's debt-to-equity ratio?
As per the latest quality metrics, Avon Mercantile has a high debt-to-equity ratio of 5.96. This indicates the company is heavily reliant on borrowed funds compared to its equity base, which can amplify risks during periods of operational loss.
How did Avon Mercantile's cash position change in Q2 FY27?
Avon Mercantile's cash and cash equivalents declined to ₹7.23 lakh as of September 30, 2026, down from ₹10.75 lakh at the end of the previous financial year in March 2026, according to a ScanX report. This indicates a tightening liquidity position alongside the operational loss.
What did Avon Mercantile management say about the Q2 FY27 loss?
Avon Mercantile's board approved the unaudited results on November 13, 2026, but no management commentary, outlook, or explanation for the surge in expenses was provided in the results announcement or associated filings reviewed by outlets like Multibagg.ai.
Did Avon Mercantile's Q2 FY27 results beat analyst estimates?
There is no available record of published analyst estimates for Avon Mercantile's Q2 FY27 results to compare against. The reported net loss of ₹0.99 crore was a severe negative surprise compared to the profit of ₹0.26 crore in the immediately preceding quarter.
What is Avon Mercantile's net profit margin?
For Q2 FY27, Avon Mercantile's net profit margin was deeply negative due to the ₹0.99 crore loss on ₹1.27 crore revenue. In the previous quarter (Q1 FY27), the company had a healthy net profit margin of 21.7%.
What is Avon Mercantile's EPS for Q2 FY27?
Avon Mercantile reported a basic and diluted loss per share (EPS) of ₹(1.33) for the quarter ended September 2026 (Q2 FY27). This compares to a positive EPS of ₹0.35 in the previous quarter (Q1 FY27).
Avon Mercantile Q2 FY27 net loss
Avon Mercantile reported a standalone net loss of ₹99.49 lakh (₹0.99 crore) for the second quarter of FY27 ended September 2026. This result was approved by the company's board of directors on November 13, 2026.
Avon Mercantile September quarter profit
For the September 2026 quarter (Q2 FY27), Avon Mercantile did not report a profit. The company posted a net loss of ₹0.99 crore, a reversal from a net profit of ₹0.19 crore in the September quarter of the previous year (Q2 FY26).
