Are Handson Global Management (HGM) Ltd latest results good or bad?

Handson Global Management (HGM) Ltd's latest financial results for Q2 FY26 reveal a complex picture characterized by significant revenue growth alongside substantial profitability challenges. The company reported a net profit of ₹0.50 crores, which reflects a notable decline of 71.10% compared to the previous quarter. In contrast, revenue surged to ₹18.95 crores, marking a remarkable year-on-year growth of 239.61% and a quarter-on-quarter increase of 39.24%, indicating strong business momentum in its software consulting operations. However, this impressive revenue growth came at a considerable cost, as evidenced by a dramatic contraction in profit after tax (PAT) margin to 2.64%, down from 12.71% in the prior quarter. The operating profit margin also fell sharply to 5.70%, highlighting the pressure on core operational profitability. The surge in employee costs, which accounted for 83.11% of revenue, further exacerbated the margin compression, raising concerns about the sustainability of the current growth trajectory. The financial performance for the first half of FY26 shows aggregate revenue of ₹32.56 crores, but cumulative net profit stood at just ₹2.23 crores, yielding a PAT margin of only 6.85%, significantly below historical averages. The company's return on equity (ROE) remains relatively healthy at 17.54%, suggesting efficient capital deployment, yet the overall quality of earnings is being questioned due to the recent margin pressures. Looking ahead, the company faces critical challenges in restoring its profitability levels. The upcoming quarters will be pivotal in determining whether the margin collapse observed in Q2 FY26 was an isolated incident or indicative of deeper operational issues. The company has experienced an adjustment in its evaluation, reflecting the market's response to these recent developments. In summary, while Handson Global has demonstrated remarkable revenue growth, the substantial decline in profitability metrics raises significant concerns about its operational efficiency and cost management. The next reporting periods will be crucial for assessing the company's ability to navigate these challenges and restore investor confidence.