Revenue grew, but faster cost growth cut operating margin to 25.44%
Year-on-year sales rose +6.20%, yet expenses grew +10.50%; other income supplied 23.85% of pre-tax profit.
Filed 03 Nov 2026, 13:06 IST · AIA Engineering Ltd (AIAENG)
Key takeaways
- AIA Engineering's consolidated operating margin fell 2.90 percentage points year on year to 25.44% as expenses grew +10.50% against revenue growth of +6.20%.
- Consolidated net profit declined 10.11% year on year, while other income contributed 23.85% of pre-tax profit.
- Operating margin fell 0.92 percentage points sequentially to 25.44%, though it remained 14.41 percentage points above the 108-peer Industrials median.
Price around the results
Sales growth did not translate into profit growth
AIA Engineering's consolidated revenue increased +6.20% year on year, but operating profit fell 4.66% and net profit declined 10.11%. Sequentially, revenue fell 4.73% and net profit fell 17.13%, indicating weaker quarter-on-quarter momentum. Interest expense fell 79.09% year on year, but that benefit was outweighed by lower operating profit and other income.
Costs drove the margin squeeze
Expenses grew +10.50% year on year against revenue growth of +6.20%, narrowing operating margin by 2.90 percentage points. Sequentially, expenses fell 3.53% but revenue fell faster at 4.73%, resulting in a 0.92 percentage-point margin decline. Other income accounted for 23.85% of pre-tax profit, while the tax rate rose 1.38 percentage points year on year to 24.30%.
Margin has declined for two straight quarters
After recovering to a 28.64% operating margin in Q4FY26, AIA Engineering reported 26.36% in Q1FY27 and 25.44% in Q2FY27. This is the second consecutive sequential decline, although the margin was 14.41 percentage points above the 11.03% median for 108 reported Industrials peers.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,113 cr | ₹1,168 cr | -4.73% | +6.20% |
| Other income | ₹79 cr | ₹117 cr | -32.60% | -20.39% |
| Expenses | ₹830 cr | ₹860 cr | -3.53% | +10.50% |
| Operating profit | ₹283 cr | ₹308 cr | -8.08% | -4.66% |
| Operating margin (%) | 25.44% | 26.36% | — | — |
| Interest | ₹2 cr | ₹0 cr | +257.78% | -79.09% |
| Depreciation | ₹31 cr | ₹29 cr | +5.09% | +9.27% |
| Profit before tax | ₹330 cr | ₹395 cr | -16.59% | -8.46% |
| Tax | ₹80 cr | ₹94 cr | -14.86% | -2.93% |
| Net profit | ₹249 cr | ₹301 cr | -17.13% | -10.11% |
| EPS (₹) | ₹26.76 | ₹32.27 | -17.07% | -9.99% |
Operating margin of 25.44% compares with a Industrials sector median of 11.03% across 108 peers that have reported Q2FY27.
What to watch
- Whether operating margin stabilises above 25.44% after two consecutive sequential declines.
- Whether expense growth moves below revenue growth after +10.50% versus +6.20% year on year.
- Whether other income's contribution to pre-tax profit falls from 23.85%.