Are High Energy Batteries (India) Ltd latest results good or bad?

High Energy Batteries (India) Ltd's latest financial results for Q2 FY26 present a complex picture of operational performance. The company reported net sales of ₹17.27 crores, reflecting a sequential growth of 30.24% from the previous quarter. However, despite this revenue growth, the company faced significant challenges in maintaining profitability. The operating margin, excluding other income, turned negative at -4.23%, indicating that the core battery manufacturing operations are currently loss-making. This marks a notable decline from the positive operating margin of 5.66% in the prior quarter. In terms of net profit, the company achieved ₹2.01 crores, which represents a substantial sequential increase of 157.69%. However, this figure is down 11.67% year-on-year, highlighting a concerning trend in profitability when compared to the same quarter last year. The increase in net profit was largely supported by a significant rise in other income, which surged to ₹4.10 crores, accounting for a notable portion of the total revenue. The financial data also indicates that High Energy Batteries is grappling with rising operational costs, particularly in employee expenses, which have surged 31.36% year-on-year. This has raised concerns about the company's cost management and operational efficiency, especially as its return on capital employed (ROCE) has declined to 16.36%, significantly below its historical average. Overall, while High Energy Batteries has demonstrated revenue growth, the underlying operational challenges, particularly the negative operating margins and reliance on non-operational income, suggest that the company is facing critical issues that could impact its long-term sustainability. Additionally, the company saw an adjustment in its evaluation, reflecting the current challenges and market perceptions regarding its financial health and operational efficiency.