Are AVT Natural Products Ltd latest results good or bad?

AVT Natural Products Ltd's latest financial results present a complex picture. In Q2 FY26, the company reported a net profit of ₹13.29 crores, reflecting a substantial year-on-year growth of 110.62%. Revenue for the same quarter reached ₹160.31 crores, marking a 31.58% increase compared to the previous year. This revenue growth indicates a strong demand recovery in the company's key product segments, as it also shows a sequential improvement from ₹132.42 crores in Q1 FY26. However, the operational metrics reveal some challenges. The operating margin, excluding other income, declined to 9.28%, down from 12.03% in the previous quarter and 6.57% in Q2 FY25. This suggests ongoing margin pressure, raising concerns about the company's ability to maintain pricing power and manage input costs effectively. The company's reliance on other income, which constituted a significant portion of profit before tax, raises questions about the sustainability of profit growth. On a half-yearly basis, AVT Natural Products generated net sales of ₹292.73 crores, a 29.04% increase over the same period last year, with a consolidated net profit of ₹25.41 crores, more than doubling from ₹12.27 crores in H1 FY25. Despite this strong top-line momentum, the quality of earnings remains a critical concern due to the dependency on other income and the negative operating cash flow reported for FY25. The company also experienced an adjustment in its evaluation, reflecting the mixed fundamentals and market perceptions regarding its growth prospects. The recent quarterly performance highlights both revenue momentum and operational challenges, suggesting that while there are positive aspects, significant headwinds persist that warrant careful monitoring moving forward.