Are Manali Petrochem latest results good or bad?

Manali Petrochemicals reported its Q2 FY26 results, which indicate a notable recovery in net profit and revenue compared to the previous year. The company achieved a net profit of ₹18.15 crores, reflecting a substantial year-on-year increase of 8,975.00%. Revenue for the quarter reached ₹248.04 crores, marking a 7.74% growth compared to the same quarter last year. This revenue figure also represents the highest quarterly sales in recent history, showing a sequential increase of 5.70% from the previous quarter.
The operating margin for Q2 FY26 was reported at 8.18%, which, while significantly improved from the previous year's low of 1.66%, indicates a decrease from the 9.73% achieved in the prior quarter. This fluctuation raises questions about the sustainability of the margins moving forward. The profit before tax included a considerable contribution from other income, which accounted for 61.46% of total operating profit, suggesting that core operational profitability may still face challenges.

Despite the reported profitability, the company is grappling with serious cash flow issues, as indicated by an operating cash flow of ₹-54.66 crores for the first half of FY26, contrasting sharply with the reported net profits. This disconnect between accounting profits and actual cash generation points to potential underlying operational inefficiencies.

In terms of evaluation, the company saw an adjustment in its evaluation, reflecting the mixed signals present in its financial performance. While the recent results showcase a recovery from a previous downturn, the reliance on non-operating income and ongoing cash flow challenges highlight significant risks that investors should consider. Overall, Manali Petrochemicals is navigating a complex landscape marked by both recovery and structural challenges in its operations.