Are ABM Knowledgeware Ltd latest results good or bad?

ABM Knowledgeware Ltd's latest financial results for Q2 FY26 indicate significant operational challenges. The company reported a net profit of ₹2.02 crore, which reflects a substantial decline of 45.84% quarter-on-quarter and 46.84% year-on-year. Revenue for the same period was ₹22.08 crore, marking a decrease of 12.07% from the previous quarter and a slight contraction of 1.52% compared to the same quarter last year. This revenue figure is the lowest recorded in the past seven quarters, suggesting persistent pressure on sales. Operating margins also faced considerable compression, falling to 14.54% from 22.14% in the prior quarter, which is the lowest level observed in recent history. The profit after tax (PAT) margin similarly dropped to 6.34%, down from 19.51% in the previous quarter, indicating a significant deterioration in profitability. The company's operational efficiency was further challenged by rising employee costs, which increased as a percentage of sales, highlighting issues with cost management. Moreover, the reliance on non-operating income has raised concerns about the sustainability of profitability, as nearly half of the profit before tax was derived from this source. The company's return on equity (ROE) remains weak at 6.62%, below industry standards, and its return on capital employed (ROCE) has also shown a declining trend. In light of these results, ABM Knowledgeware experienced an adjustment in its evaluation, reflecting the broader implications of its financial performance. The absence of institutional investor interest and the company's elevated valuation metrics relative to its peers further complicate the outlook. Overall, the results underscore a challenging operational environment for ABM Knowledgeware, raising questions about its future performance and sustainability in the competitive software products sector.