Are Allied Digital latest results good or bad?

Allied Digital Services has reported its financial results for the quarter ending March 2025, revealing a complex picture. While net sales for the latest six months reached Rs 424.92 crore, reflecting a year-on-year growth of 22.16%, this positive growth is overshadowed by significant declines in profitability metrics.
The Profit Before Tax (PBT) has fallen to Rs -26.55 crore, marking a substantial decline compared to the average PBT of the previous four quarters, which was Rs 15.35 crore. Similarly, the Profit After Tax (PAT) dropped to Rs -7.61 crore, down from an average of Rs 13.46 crore in prior quarters. The operating profit also registered a low of Rs -9.30 crore, resulting in an operating profit margin of -4.55%, indicating challenges in operational efficiency.

Additionally, interest expenses have risen by 69.36% over the preceding nine months, contributing to concerns regarding financial stability. Notably, non-operating income accounted for a significant portion of PBT, raising questions about the sustainability of the company's business model.

In the quarter-on-quarter comparison, net sales showed a slight decline of -0.25% from the previous quarter, while the standalone net profit exhibited a notable increase of 435.86%. However, the operating profit (excluding other income) fell sharply, indicating operational difficulties.

Overall, the financial results suggest that Allied Digital Services is facing substantial challenges in profitability and operational efficiency, leading to an adjustment in its evaluation.