Orchasp Ltd has returned to profitability in FY 2025-26, reporting a net profit of Rs 1.05 crore compared to a loss of Rs 10.52 crore in the previous year. Alongside this turnaround, the board approved a preferential issue of 1.5 crore shares to promoters at Rs 4.74 each to settle outstanding loans. However, investors should remain cautious as the statutory auditor raised concerns regarding subsidiary valuations, unpaid statutory dues, and pending GST demands.
Orchasp Reports FY26 Profit of Rs 1.05 Crore; Faces Auditor Scrutiny
Net Profit: Rs 1.05 crore vs. FY25 Loss of Rs 10.52 crore.
Preferential Issue: 1.5 crore shares to promoter group at Rs 4.74 each.
Reader Takeaway: Profitability returns to the balance sheet, but persistent auditor concerns on statutory dues and tax liabilities remain.
What just happened
Orchasp Ltd has declared its financial results for FY 2025-26, showcasing a swing to a net profit of Rs 1.05 crore. Revenue remained largely steady at Rs 21.26 crore. To manage capital structure, the board approved the issuance of 1.5 crore equity shares to promoter entity M/s Wahtulmsylh Llmqawlat at Rs 4.74 per share. This exercise, valued at Rs 7.11 crore, is intended to convert existing loan dues into equity.
Why this matters
The return to profitability signals an operational shift, but the auditor’s qualified opinion casts a shadow over these financials. Key issues flagged include the valuation of a non-operational Portuguese subsidiary, 'Cybermate International,' and the failure to clear statutory dues like TDS as of March 2026. Additionally, the company is dealing with a significant GST demand of Rs 12.58 crore arising from an audit of the 2021-24 period, which creates a material contingent liability.
What changes now
Following the board's approval, the equity base will expand through the preferential issue. Management has indicated that current liquidity constraints are temporary and they are working to regularize outstanding tax payments and administrative hurdles. Shareholders should watch for the resolution of the pending FEMA and tax disputes currently before the appellate authorities.
Risks to watch
The auditor’s qualification is the primary risk factor. Concerns over aging trade receivables, potential impairment of assets in the US and Portugal, and ongoing tax litigations pose a threat to future cash flow stability. Investors should monitor how the company balances its liquidity needs against these regulatory demands.
What to track next
Watch for the upcoming disclosures regarding the management's decision on the Rs 12.58 crore GST demand—specifically, whether they choose to pay or contest the order. Any updates on the status of statutory dues and the operational integration of assets from the Portuguese unit will be critical for assessing transparency.