Are Arihant Capital latest results good or bad?

Arihant Capital's latest financial results present a complex narrative characterized by both recovery and ongoing challenges. In the quarter ended September 2025, the company reported consolidated net sales of ₹50.77 crores, reflecting a quarter-on-quarter increase of 12.23% from the previous quarter. However, this figure continues to highlight a significant year-on-year decline of 30.27%, indicating persistent revenue erosion that has been evident over multiple quarters.
The consolidated net profit for the same period was ₹12.70 crores, which showed a modest quarter-on-quarter growth of 2.99% compared to the previous quarter's profit of ₹12.70 crores. Nevertheless, this profit figure represents a notable year-on-year decline of 32.48%, raising concerns about the company's ability to maintain profitability amidst challenging market conditions.

Arihant Capital's operating profit margin stood at 39.98%, which, while healthy, reflects a decrease from the 41.08% margin achieved in the corresponding quarter last year. This margin indicates effective cost management, as the company has managed to maintain relatively stable operating margins despite declining revenues.

The company's return on equity (ROE) for the latest period was reported at 14.62%, which is below its five-year average of 17.75%. This decline suggests a reduction in capital efficiency, raising questions about the effectiveness of management's capital allocation strategies.

Additionally, the financial results reveal a concerning trend in cash flow, with operating cash flow turning negative at ₹29.00 crores in FY25, a reversal from positive cash flow in prior years. This operational cash drain, coupled with adverse working capital changes, raises sustainability concerns for the company's business operations.

Overall, while Arihant Capital has demonstrated some sequential recovery in profit and margin metrics, the persistent revenue decline and deteriorating capital efficiency present significant challenges. The company has experienced an adjustment in its evaluation, reflecting the mixed signals in its financial performance. Investors should closely monitor future revenue trends and operational efficiency to gauge the company's potential for recovery.