Are Lyka Labs Ltd latest results good or bad?

Lyka Labs Ltd's latest financial results for Q2 FY26 reveal significant operational challenges. The company reported a net loss of ₹3.36 crores, a stark contrast to the profit of ₹0.93 crores in the previous quarter, indicating a troubling shift in profitability. Revenue for the quarter was ₹36.66 crores, reflecting a sequential increase of 10.99% from ₹33.03 crores in Q1 FY26, but this was accompanied by a year-on-year decline of 10.93% from ₹41.16 crores in Q2 FY25. The operating margin, which excludes other income, fell dramatically to -6.93%, down from 11.17% in the prior quarter. This substantial decline in margins suggests that the company is facing severe cost pressures, particularly with employee costs rising significantly, which have outpaced revenue growth. The profit before tax also turned negative, highlighting a critical profitability crisis. In terms of return metrics, the latest return on equity (ROE) has dropped to 2.02%, while the return on capital employed (ROCE) is at 2.22%, both indicating minimal returns on capital invested. The balance sheet shows long-term debt reduced to ₹19.21 crores, but with negative EBITDA, the company's ability to service this debt is now in question. Additionally, institutional interest in Lyka Labs remains low, with foreign institutional investors holding just 0.17% and mutual funds at 0.01%. This lack of institutional confidence could further impact liquidity and market perception of the company. Overall, the results reflect a company in distress, grappling with operational inefficiencies and a lack of clear recovery strategies. The company saw an adjustment in its evaluation, which aligns with the ongoing operational difficulties and market performance challenges.