Are Haryana Leather Chemicals Ltd latest results good or bad?

Haryana Leather Chemicals Ltd's latest financial results for the quarter ended December 2025 present a complex picture of operational performance. The company experienced a contraction in net sales of 10.01% quarter-on-quarter, bringing total sales to ₹11.78 crores, which marks the second consecutive quarter of revenue decline. Year-on-year, sales also fell by 6.51%, indicating ongoing challenges in demand. Despite this decline in sales, the company reported a significant recovery in net profit, which rose to ₹0.57 crores, a notable increase from the previous quarter's ₹0.18 crores. This recovery in profitability was primarily attributed to a normalization of the effective tax rate, which had been unusually high in the prior quarter. However, the operating margin, excluding other income, compressed to 5.18% from 6.57%, reflecting pressures on profitability amidst declining sales. A critical concern remains the company's return on equity, which stood at 4.75% for the latest period, significantly below industry standards. This low return indicates challenges in capital efficiency and raises questions about the company's ability to generate sustainable shareholder value. The overall financial performance suggests that while there was a sequential recovery in net profit, underlying operational weaknesses persist, particularly in sales and margin performance. In light of these results, Haryana Leather Chemicals saw an adjustment in its evaluation, reflecting the complexities of its financial situation. The company operates in a volatile commodity chemicals sector, facing significant headwinds from raw material price fluctuations and subdued demand conditions, which are likely impacting its operational efficiency and overall financial health.