Are Harish Textile Engineers Ltd latest results good or bad?

Harish Textile Engineers Ltd has recently reported its financial results, reflecting a complex operational landscape. In H1 FY26, the company achieved a net profit of ₹2.18 crores, marking a return to profitability after several years of losses. This improvement is attributed to enhanced capacity utilization and operational efficiency, with the operating profit margin reaching 8.99% in Q2 FY26, the highest recorded to date. For FY25, the company reported net sales of ₹132 crores, which represents a modest year-on-year growth of 0.8%. However, this growth is overshadowed by stagnating operating profits, which remained flat at ₹5 crores, resulting in an operating margin of 3.8%. This margin reflects significant challenges in managing costs and pricing power, as it has deteriorated from 6.6% in FY22. The financial structure of Harish Textile remains a concern, with a debt-to-equity ratio averaging 3.94 times over the past five years, indicating high leverage risk. The company has made some progress in reducing long-term debt from ₹5.86 crores in March 2024 to ₹1.19 crores in March 2025, yet the overall leverage remains a critical issue, particularly with an EBIT to interest coverage ratio of 0.96 times, suggesting that operating profits barely cover interest obligations. In the most recent quarter ending September 2025, Harish Textile reported a 10.26% increase in net sales compared to the previous quarter, reflecting a positive trend in revenue generation. However, the standalone net profit saw a decline of 12.07% from the prior quarter, indicating potential volatility in profitability. Overall, while Harish Textile Engineers Ltd has shown signs of operational improvement and a return to profitability, significant structural weaknesses, particularly regarding its debt levels and operating margins, continue to pose challenges. The company has experienced an adjustment in its evaluation, reflecting these mixed operational trends.