Are Honeywell Auto latest results good or bad?

Honeywell Automation India's latest quarterly results for Q2 FY26 present a mixed picture. The company reported a year-on-year revenue growth of 12.26%, reaching ₹1,149.40 crores, indicating healthy topline performance. However, this growth was accompanied by a sequential decline of 2.85% from the previous quarter, marking the first contraction in over a year.
Profitability metrics showed signs of deterioration, with operating margins excluding other income contracting to 11.45% from 12.60% in the same quarter last year. This decline in margins raises concerns about the company's ability to maintain its premium valuation, especially given the ongoing competitive pressures and rising costs. Net profit for the quarter was ₹119.50 crores, reflecting a 3.82% increase year-on-year but a 4.09% decrease compared to the previous quarter.

The operational challenges are further highlighted by the significant increase in employee costs, which rose by 12.31% year-on-year, outpacing revenue growth and contributing to negative operating leverage. Additionally, the company's return on equity has shown a decline, indicating modest returns relative to its valuation.

Overall, while Honeywell Automation India continues to demonstrate strong revenue growth on a year-over-year basis, the sequential declines in both revenue and profitability metrics suggest underlying operational challenges. The company saw an adjustment in its evaluation, reflecting these mixed results and the pressures on its financial performance. Investors may need to closely monitor the company's ability to navigate these challenges moving forward.