Are Harrisons Malayalam Ltd latest results good or bad?

Harrisons Malayalam Ltd's latest financial results for the quarter ended September 2025 present a complex picture of performance. The company reported a net profit of ₹6.42 crores, reflecting a significant year-on-year increase of 56.20%. However, this profitability was largely driven by a substantial rise in non-operating income, which surged to ₹11.75 crores from ₹1.71 crores in the same quarter last year. This reliance on other income raises concerns about the sustainability and quality of earnings, as the core operational performance showed signs of deterioration. Net sales for the quarter were ₹134.40 crores, representing a slight decline of 2.11% from the previous year, although there was a sequential recovery of 15.40% from the prior quarter. The operating margin, excluding other income, fell to -0.51%, marking the lowest level in seven quarters and indicating significant operational challenges within the company's plantation and engineering segments. The operational profit before depreciation, interest, tax, and other income (PBDIT excl OI) turned negative at ₹-0.68 crores, highlighting the struggles in generating profit from core operations. On a half-yearly basis, the company reported net sales of ₹250.86 crores and a combined net profit of ₹12.38 crores, which appears to be an improvement compared to the loss-making period of the previous year. However, this improvement is largely attributed to the base effect of prior-year losses and the elevated other income, rather than genuine operational enhancements. The financial metrics indicate that while there has been a notable improvement in net profit, the underlying operational performance remains weak, characterized by high employee costs and a concerning debt-to-EBITDA ratio of 4.49 times. The company's financial flexibility is constrained by negative working capital, with current liabilities significantly exceeding current assets. Overall, Harrisons Malayalam Ltd's results suggest a company facing substantial operational challenges, with a concerning reliance on non-operating income to report profitability. The company has seen an adjustment in its evaluation, reflecting these underlying issues. Investors may want to consider these factors carefully in assessing the company's future prospects.