Are Gulshan Polyols latest results good or bad?

Gulshan Polyols' latest financial results for Q2 FY26 reveal a significant transformation in profitability, with net profit rising dramatically to ₹15.75 crores, compared to just ₹1.22 crores in the same quarter last year. This substantial increase is primarily attributed to margin expansion, as the operating margin reached 7.73%, marking the highest level in the last seven quarters and reflecting effective cost management and operational efficiency.
Revenue for the quarter, however, was ₹541.72 crores, which represents a year-on-year growth of 22.99%, but a sequential decline of 8.68% from the previous quarter's revenue of ₹593.23 crores. This divergence between revenue and profit trends highlights the company's enhanced operational efficiency, although it raises questions about the sustainability of demand moving forward.

For the half-year period ending in September 2025, Gulshan Polyols reported consolidated revenue of ₹1,134.95 crores, indicating a robust growth of 26.81% compared to the same period last year. The company's profit before tax, excluding other income, reached its highest quarterly figure at ₹22.27 crores, showcasing strong core operational strength.

Despite these positive developments, the company continues to face challenges, particularly concerning its return ratios, which remain weak. The return on equity (ROE) stands at a modest 4.02%, and the return on capital employed (ROCE) is similarly low at 5.83%. These figures suggest that while the company has made strides in profitability, it still struggles to create substantial value relative to its capital employed.

Additionally, the company's balance sheet reflects a capital-intensive business model, with fixed assets comprising a significant portion of total assets. Although there has been progress in deleveraging, with long-term debt reduced to ₹169.94 crores, the debt-to-EBITDA ratio remains elevated at 4.85 times, indicating ongoing financial constraints.

Overall, while Gulshan Polyols has demonstrated notable improvements in profitability metrics and operational efficiency, concerns regarding revenue sustainability and weak return ratios persist. The company saw an adjustment in its evaluation, reflecting the mixed nature of its financial performance and operational challenges.