Are Ashoka Buildcon Ltd. latest results good or bad?

Ashoka Buildcon Ltd. has reported its financial results for Q2 FY26, revealing significant operational challenges. The consolidated net profit for the quarter stood at ₹78.06 crores, reflecting a substantial decline of 82.92% year-on-year. This sharp drop in profitability is accompanied by a notable decrease in revenue, which fell to ₹1,851 crores, representing a 25.62% decline compared to the same quarter last year. This revenue figure marks the lowest quarterly sales in the trailing twelve-month period, indicating a concerning trend for the company. Despite these challenges, Ashoka Buildcon has maintained a relatively stable operating margin of 31.60%, although this is down from 36.37% in Q2 FY25. The company has demonstrated effective cost management, as evidenced by its operating profit (PBDIT) of ₹584.95 crores, despite the revenue contraction. However, the interest coverage ratio has dropped to a critical level, with operating profit barely covering interest expenses, which remained elevated at ₹317.98 crores. The financial results highlight a transition phase for Ashoka Buildcon, as the company has aggressively reduced its long-term debt from ₹3,789.83 crores in FY24 to ₹727.82 crores in FY25. This strategic deleveraging has improved the debt-to-equity ratio, positioning the company more favorably for future growth. However, the revenue decline raises questions about the effectiveness of its new business model following the monetization of BOT assets. In summary, Ashoka Buildcon's latest results reflect a company facing significant operational headwinds, with declining revenues and profits. The company has seen an adjustment in its evaluation, indicating that while it has made strides in debt reduction and maintaining return metrics, the immediate outlook remains challenging due to execution issues in its core EPC business.