Are Celebrity Fash. latest results good or bad?

Celebrity Fashions' latest financial results for Q2 FY26 reveal a complex operational landscape. The company reported a net loss of ₹3.95 crores, which represents a narrowing from the previous quarter's loss of ₹6.73 crores, indicating some sequential improvement. However, this improvement occurs alongside persistent operational challenges, as evidenced by an operating margin of -3.81%, marking six consecutive quarters of negative margins.
Revenue for the quarter stood at ₹42.52 crores, reflecting an 8.06% year-on-year increase from ₹39.35 crores in Q2 FY25 and a 4.55% sequential growth from ₹40.67 crores in Q1 FY26. This suggests a degree of resilience in order book execution despite ongoing difficulties in the broader market. However, the inability to convert this revenue growth into profitability raises concerns about the sustainability of the business model.

The financial metrics also highlight critical vulnerabilities. The company's interest coverage ratio is below 1x at 0.89, indicating challenges in servicing debt obligations from operating earnings. Additionally, the debt-to-EBITDA ratio stands at 9.50 times, reflecting a highly leveraged position that could amplify risks during periods of operational stress.

Despite the marginal revenue growth, the operational efficiency remains a significant concern, with employee costs consuming a substantial portion of revenues. The company's return on equity (ROE) has deteriorated sharply to -79.95%, a stark contrast to its historical average, underscoring severe value destruction for shareholders.

In terms of evaluation, Celebrity Fashions experienced an adjustment in its evaluation, reflecting the market's recognition of its ongoing operational challenges and the need for substantial restructuring to address its financial distress. The overall picture suggests that while there are signs of revenue growth, the underlying operational issues and financial metrics indicate a need for urgent attention to restore profitability and investor confidence.