Revenue ₹70.4 Cr (+36% YoY), consolidated PAT ₹5.4 Cr (+67%); OPM compressed by capex

Avantel reported strong Q1 FY-2027 results with consolidated revenue ₹70.42 Cr, up 35.6% YoY and 10.3% QoQ, while net profit surged 67.1% to ₹5.39 Cr from ₹3.23 Cr a year ago and ₹4.77 Cr in Q4 FY-2026. The Communications & Signal Processing segment (core business, 99.6% of revenue) delivered ₹70.23 Cr and PBT of ₹10.92 Cr; the wholly-owned Healthcare subsidiary (iMeds) contributed only ₹30.4 Lakhs in revenue but posted a ₹2.22 Cr loss. Operating margin compressed sharply to 12.4% from 20.1% YoY and 21.3% QoQ, driven by elevated depreciation of ₹7.10 Cr stemming from recent capex investment in manufacturing infrastructure; net profit margin expanded to 7.7% YoY (from 6.2%) but was flat QoQ (7.35%). The 29% gap between standalone PAT (₹7.62 Cr) and consolidated (₹5.39 Cr) reflects the healthcare subsidiary's drag—a structural issue investors should monitor as management develops this segment. Consolidated EPS declined to ₹0.20 from ₹0.32 YoY despite strong profit growth, indicating material share dilution from ESOP issuance (₹135.59 Lakhs in option expense this quarter). The company's principal customer is government-controlled, eliminating loss allowance risk. Strong topline growth (+36% YoY) and profit expansion (+67%) demonstrate solid business momentum, but the significant margin compression warrants close monitoring to assess whether capex-driven depreciation represents a cyclical trough or signals structural operating leverage challenges. Management has not provided FY-2027 guidance.