Are Arihant Super. latest results good or bad?

Arihant Superstructures' latest financial results for Q2 FY26 reveal a complex picture of operational performance. The company reported net sales of ₹122.65 crores, reflecting a modest quarter-on-quarter growth of 1.40% from ₹120.96 crores in Q1 FY26. Year-on-year, this represents a healthier growth of 9.70% compared to ₹111.80 crores in Q2 FY25. However, this revenue growth contrasts sharply with the company's profitability metrics, which have shown significant deterioration.
Net profit for the quarter fell to ₹9.96 crores, a decline of 37.40% from ₹15.91 crores in the previous quarter, and a decrease of 37.63% year-on-year. The operating margin also contracted sharply to 24.42%, down from 30.50% in Q1 FY26, indicating rising operational costs relative to revenue growth. The PAT margin similarly compressed to 8.12%, down from 13.15% in the prior quarter.

The company's financial performance over the first half of FY26 shows net sales of ₹243.61 crores and a net profit of ₹25.87 crores, which indicates year-on-year growth of 24.62% and 44.04%, respectively, compared to H1 FY25. However, the operational challenges are underscored by a negative operating cash flow of ₹177.84 crores for FY25, driven by increased working capital requirements and slower receivables collection.

Additionally, the company has seen a notable increase in interest expenses, which have risen significantly, reflecting elevated debt levels and contributing to a weak interest coverage ratio. The balance sheet shows a debt-to-equity ratio of 2.33 times, indicating high leverage.

In light of these results, Arihant Superstructures experienced an adjustment in its evaluation, reflecting the market's reassessment of its operational and financial health amidst these challenges. Overall, while the company has demonstrated some revenue growth, the substantial decline in profitability and cash flow generation raises concerns about its financial sustainability moving forward.