Are Adroit Infotech Ltd latest results good or bad?

Adroit Infotech Ltd's latest financial results for Q2 FY26 present a complex picture characterized by significant revenue growth alongside challenges in profitability. The company reported a remarkable year-on-year revenue increase of 61.81%, reaching ₹11.44 crores, which reflects successful client acquisition and project execution. However, this growth is juxtaposed with a concerning decline in net profit, which stood at ₹0.77 crores, marking a sequential decrease from the previous quarter's ₹0.84 crores despite a year-on-year increase of 71.11%. The operating margins have also contracted significantly, falling to 11.01% from 13.63% in the prior quarter, indicating pressure on profitability due to rising employee costs, which accounted for over 51% of revenue. This compression in margins raises questions about the sustainability of the company's growth, as the profit after tax margin has decreased sharply from 23.74% in March 2024 to 6.73% in the latest quarter. Moreover, the company's average return on equity (ROE) is reported at 6.69%, which is below industry standards, highlighting inefficiencies in capital deployment. The latest return on capital employed (ROCE) is negative at -2.74%, further underscoring operational challenges. Overall, while Adroit Infotech has demonstrated impressive revenue growth, the deterioration in profitability metrics and operational efficiency presents significant concerns. The company has experienced an adjustment in its evaluation, reflecting these underlying issues. The financial performance indicates a disconnect between top-line growth and bottom-line results, suggesting that the company must focus on improving its profitability to ensure sustainable growth moving forward.