💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 26% YoY to INR 510.75 Cr in FY25. For H1 FY26, operational income reached INR 310.2 Cr, a 32.4% increase YoY. The Placement Services Division is being actively scaled to become a significant revenue contributor.

Geographic Revenue Split

As of Q2 FY26, the geographic revenue split is 88% from India and 12% from International markets. The company operates in the UAE, UK, Indonesia, Oman, Qatar, and is commencing operations in Saudi Arabia.

Profitability Margins

Net Profit Margin for FY25 was 1.67%, a 39.16% decrease from 2.74% in FY24. However, PAT margins improved in Q2 FY26 to 3.02%, up 128 bps YoY from 1.74% in Q2 FY25.

EBITDA Margin

EBITDA margin for FY25 was 2.52%, down 23.94% from 3.31% in FY24 due to higher employee and finance costs. Q2 FY26 EBITDA margin showed recovery at 3.46%, an increase of 181 bps YoY.

Capital Expenditure

The company has no material capital expenditure plans over the medium term as it operates a service-based model. Net worth stood at INR 124 Cr as of March 31, 2025, compared to INR 116 Cr in the previous fiscal.

Credit Rating & Borrowing

CRISIL has assigned a 'Stable' outlook. Adjusted debt to adjusted net worth was 0.21 times in FY25, up from 0.08 times in FY24. Interest coverage ratio moderated to 4.3 times in FY25 from 8.2 times in FY24 due to increased finance costs.

⚙️ Operational Drivers

Raw Materials

As a service provider, the primary 'input cost' is technical manpower. Employee Benefit Expenses represent 74% of total revenue, amounting to INR 377 Cr in FY25.

Import Sources

Not applicable as the company provides technical manpower services; however, talent is sourced globally with a focus on India and the Middle East.

Key Suppliers

Not applicable for a manpower supply firm. The company relies on its internal database of over 800,000 resumes for talent sourcing.

Capacity Expansion

Current capacity is defined by a database of 800,000+ resumes. Expansion is focused on geographic reach, including the recent incorporation of Aarvi Energy Company in Saudi Arabia and the acquisition of MNR Technical Services in the UAE.

Raw Material Costs

Employee benefit expenses increased 28% YoY to INR 377 Cr in FY25, driven by higher salary costs and branch expansions.

Manufacturing Efficiency

Not applicable. Operational efficiency is tracked via the Net Capital Turnover Ratio, which improved to 7.62 in FY25 from 6.08 in FY24.

Logistics & Distribution

Not applicable; distribution is handled through a network of international and domestic branches.

📈 Strategic Growth

Expected Growth Rate

31-32%

Growth Strategy

Growth will be achieved through geographic expansion into Saudi Arabia and the UK, scaling the Placement Services Division, and diversifying into new industry verticals such as Automobile, Marine, Defence, and Healthcare. The acquisition of MNR Technical Services in the UAE also provides a platform for Middle Eastern growth.

Products & Services

Technical manpower supply (engineers, designers, technicians), project management, pre-commissioning and commissioning services, and operations and maintenance (O&M) staffing.

Brand Portfolio

Aarvi Encon

New Products/Services

Expansion into new verticals like Automobile and Healthcare; expected revenue contribution not specifically quantified but identified as a key growth driver.

Market Expansion

Targeting Saudi Arabia (operations commencing soon), UAE (via MNR acquisition), and the UK.

Market Share & Ranking

The industry is highly fragmented with low entry barriers; specific market share percentage is not disclosed.

Strategic Alliances

Joint venture: Aarvi Encon Staffing Services W.L.L. (Qatar); Associate: PT. Aarvi Encon Services (Indonesia).

🌍 External Factors

Industry Trends

The technical staffing industry is evolving toward digitization and niche skill requirements. While Oil & Gas remains dominant (75%), there is a shift toward Renewables and IT sectors.

Competitive Landscape

Intense competition from both domestic and international staffing and engineering service providers due to low entry barriers.

Competitive Moat

The moat is built on a 37-year track record, a massive proprietary database of 800,000+ resumes, and long-standing relationships with Tier-1 clients like Reliance. This is sustainable due to the high cost of recruitment errors in technical engineering fields.

Macro Economic Sensitivity

Highly sensitive to economic cycles in the energy and infrastructure sectors. GDP growth and industrial capex directly correlate with manpower demand.

Consumer Behavior

Client behavior is shifting toward a preference for flexible, temporary technical staffing to manage project-based costs.

Geopolitical Risks

Operations in the Middle East (Oman, Saudi Arabia, UAE, Qatar) expose the company to regional political and socio-economic developments.

⚖️ Regulatory & Governance

Industry Regulations

Subject to frequent changes in labor laws, government policies, and safety regulations (HSE) across India and the Middle East.

Environmental Compliance

Not disclosed as a significant cost for this service-based business.

Taxation Policy Impact

Current tax was INR 1 Cr on a PBT of INR 11 Cr in FY25. The company is subject to changes in taxation frameworks in multiple international jurisdictions.

Legal Contingencies

The company maintains adequate internal financial controls; specific values for pending court cases or labor disputes are not disclosed in the available documents.

⚠️ Risk Analysis

Key Uncertainties

Susceptibility to cyclicality in end-user industries (Oil & Gas) and potential revenue loss from contract non-renewal due to client concentration.

Geographic Concentration Risk

88% of revenue is concentrated in the Indian market as of Q2 FY26.

Third Party Dependencies

High dependency on the capital expenditure plans of key clients like Reliance Industries and Tecnimont.

Technology Obsolescence Risk

Risk of falling behind in recruitment technology; mitigated by the implementation of resume data management and HR digitization tools.

Credit & Counterparty Risk

Receivables quality is generally high given the Tier-1 client base, though the company monitors Expected Credit Loss (ECL) as part of its financial reporting.