Are Adroit Info. latest results good or bad?

Adroit Infotech's latest financial results for Q2 FY26 indicate a notable recovery in net profit, which shifted from a loss of ₹0.79 crores in the previous quarter to a profit of ₹0.84 crores. This represents a significant year-on-year growth of 71.43% compared to ₹0.49 crores in Q2 FY25. However, when examining revenue, the company experienced a sequential decline of 5.48%, with revenues falling from ₹10.40 crores in Q1 FY26 to ₹9.83 crores in Q2 FY26. In contrast, the year-on-year revenue growth was robust at 49.85%, reflecting an expanding client base and improved project execution.
The operating margin improved to 13.63% in Q2 FY26 from 9.60% in the same quarter last year, indicating enhanced cost management and operational efficiency. Additionally, the profit after tax (PAT) margin rose to 8.55% from 7.47% year-on-year, although it remains below the 23.74% margin achieved in Q4 FY24.

Despite the positive quarterly results, Adroit Infotech faces significant operational challenges, including weak return ratios and a concerning long-term EBIT decline of -222.64% over five years. The company's return on equity (ROE) metrics are also troubling, with the latest figure at -4.04%, suggesting inefficiencies in capital utilization.

The balance sheet shows a substantial increase in share capital, indicating equity dilution, while current assets have expanded significantly, raising questions about the effective deployment of these resources. Furthermore, the absence of institutional investor participation highlights a lack of confidence in the company's growth prospects.

Overall, while Adroit Infotech's recent quarterly performance reflects a recovery from previous losses and improved margins, the underlying challenges and volatility in revenue raise concerns about the sustainability of this performance. The company has seen an adjustment in its evaluation, reflecting the market's reassessment of its operational consistency and growth potential.