Are ASM Technologies latest results good or bad?

ASM Technologies has reported significant operational advancements in its latest financial results for Q2 FY26. The company achieved a net profit of ₹15.57 crores, reflecting a substantial year-on-year growth of 405.52% and a quarter-on-quarter increase of 1.43%. Revenue for the same period reached ₹122.92 crores, marking a remarkable year-on-year rise of 133.60% and a sequential growth of 7.34%.
The operating margin also showcased a notable expansion, reaching 20.94%, up from 7.32% in the same quarter last year, although it experienced a slight contraction from the previous quarter's 22.22%. This margin improvement has been a key driver of ASM's profitability, with operating profit (PBDIT excluding other income) increasing significantly to ₹25.74 crores, compared to ₹3.85 crores in Q2 FY25.

Despite these positive operational metrics, the company is facing valuation concerns, as indicated by its high price-to-earnings ratio of 152 times trailing earnings. This valuation level raises questions about the sustainability of its growth and the potential for future returns, given the elevated expectations embedded in the current stock price.

The financial performance reflects a strong turnaround from a loss-making position in FY24, with consistent sequential growth observed over the past four quarters. However, the company has seen an adjustment in its evaluation, suggesting that while operational performance is strong, the market's expectations may be overly optimistic.

Overall, ASM Technologies' latest results highlight a company that is effectively capitalizing on growth opportunities within the IT services sector, yet it also faces challenges related to maintaining its valuation amidst such rapid growth. Investors should monitor the company's ability to sustain its momentum while managing the associated risks.