Are Allcargo Termi latest results good or bad?

Allcargo Terminals reported its Q2 FY26 results, highlighting a mixed operational performance. The company achieved consolidated net sales of ₹207.16 crores, marking a quarter-on-quarter growth of 10.63% and a year-on-year increase of 6.29%. This revenue figure represents the highest quarterly sales in the company's recent history, indicating strong operational efficiency and market share gains in the competitive container handling sector.
Operating margins also showed notable improvement, expanding to 19.47%, which is the highest recorded in the last eight quarters. This margin growth reflects better capacity utilization and operational efficiencies. However, despite these positive operational metrics, the consolidated net profit for the quarter was ₹11.30 crores, which, while showing a quarter-on-quarter growth of 24.04%, only increased by 1.16% year-on-year. This disparity suggests challenges in translating top-line growth into bottom-line profitability, particularly when considering the half-yearly performance where net profit growth remained virtually flat compared to the previous year.

The company faces significant pressure from rising interest costs, which have more than doubled year-on-year, consuming a substantial portion of operating profits. Interest expenses reached ₹14.52 crores in Q2 FY26, reflecting a 105.08% increase from the same quarter last year. This rising cost, coupled with elevated depreciation expenses, has raised concerns about the sustainability of profit growth moving forward.

In terms of financial metrics, Allcargo Terminals maintains a return on equity of 16.30% on a five-year average basis, indicating reasonable capital efficiency. However, the latest figures show a declining trend in return metrics, particularly in return on capital employed, which stands at 10.01% for the latest period.

Overall, while Allcargo Terminals demonstrated operational strength through revenue and margin expansion, the persistent challenges in profit growth due to escalating interest costs and high leverage raise questions about the sustainability of its financial performance. The company saw an adjustment in its evaluation, reflecting the complexities of its current financial landscape.