Are Elgi Rubber Company Ltd latest results good or bad?

Elgi Rubber Company Ltd's latest financial results for Q2 FY26 reveal significant challenges in profitability and operational efficiency. The company reported a net loss of ₹6.01 crores, which represents a substantial deterioration compared to the previous quarter's loss of ₹1.51 crores, as well as a worsening from a loss of ₹4.13 crores in the same quarter last year. This trend indicates ongoing difficulties in achieving profitability. Revenue for the quarter stood at ₹94.49 crores, reflecting a year-on-year decline of 4.25% from ₹98.68 crores in Q2 FY25, although it showed a sequential improvement of 10.41% from ₹85.58 crores in Q1 FY26. Despite this revenue uptick, the operating margin remained low at 1.84%, only slightly down from 1.85% in the previous quarter and significantly compressed from 6.16% in Q2 FY25. This indicates persistent operational inefficiencies and rising input costs. The company's financial structure is concerning, with a debt-to-equity ratio of 1.83x, the highest on record, indicating increased leverage and financial risk. The interest burden of ₹6.54 crores in Q2 FY26 further exacerbates the situation, as it consumes a large portion of the operating profit, which was only ₹1.74 crores. This dynamic raises questions about the company's ability to service its debt obligations. Overall, Elgi Rubber's financial performance highlights a critical juncture for the company, characterized by persistent losses, elevated debt levels, and compressed margins. The company has experienced an adjustment in its evaluation, reflecting the ongoing struggles and the need for significant operational restructuring to address these challenges.