Are Mahindra Holiday latest results good or bad?

Mahindra Holidays reported its financial results for Q2 FY26, revealing a complex operational landscape. The company achieved net sales of ₹717.34 crores, reflecting a quarter-on-quarter growth of 2.27% from ₹701.40 crores in Q1 FY26. Year-on-year, revenue growth was recorded at 6.95%, slightly above its five-year sales growth trajectory of 6.61%.
Net profit for the quarter stood at ₹17.85 crores, showing a significant sequential increase of 126.81% compared to ₹7.87 crores in the previous quarter. However, this profit figure is concerning as it was heavily influenced by other income, which constituted 90.43% of profit before tax, raising questions about the sustainability of core business earnings. The profit before tax was only ₹35.51 crores, with a high tax rate of 52.30% further eroding profitability.

The operating margin, excluding other income, improved to 21.29%, up from 17.46% in Q1 FY26, indicating some recovery in operational efficiency. However, this margin remains below the 26.24% achieved in Q4 FY25, suggesting ongoing challenges in maintaining consistent operational performance.

A critical concern for Mahindra Holidays is the record-high interest cost of ₹48.13 crores, which accounted for 135.53% of profit before tax, indicating a substantial burden on profitability. The company’s debt-to-EBITDA ratio stands at 5.50x, and net debt to equity at 2.73x, both of which signal a highly leveraged capital structure that could pose risks to financial stability.

In summary, while Mahindra Holidays demonstrated some sequential recovery in sales and profit metrics, the underlying operational pressures, particularly related to debt servicing and reliance on other income, highlight significant challenges. The company saw an adjustment in its evaluation, reflecting these complexities in its financial performance.