Are Manba Finance latest results good or bad?

Manba Finance's latest financial results for Q2 FY26 reveal a complex picture of growth and underlying challenges. The company reported net sales of ₹72.33 crores, reflecting a sequential growth of 14.74% from the previous quarter. Year-on-year, net sales grew by 17.78%, indicating strong momentum in its vehicle financing business. However, net profit for the same quarter reached ₹11.40 crores, which, while showing a sequential increase of 16.92%, only represents a modest year-on-year growth of 2.06%. This suggests that profit growth is not keeping pace with revenue expansion.
The operating profit margin, excluding other income, was reported at 70.90%, which is a robust figure, yet the profit after tax margin of 15.76% indicates some compression compared to previous periods, primarily due to rising interest costs. The company's return on equity (ROE) remains weak at 10.25%, raising concerns about capital efficiency, especially when compared to industry standards.

Additionally, Manba Finance has faced significant challenges, including persistent negative operating cash flows amounting to ₹323.56 crores in FY25, which raises questions about the sustainability of its growth model. The company's reliance on borrowed funds is evident, with a debt-to-equity ratio of 2.91 times, indicating elevated financial risk.

The shareholding pattern reflects a concerning trend, with foreign institutional investor (FII) holdings dropping dramatically from 5.23% to 0.88%, signaling a lack of confidence from institutional investors. Despite these challenges, the company has seen an adjustment in its evaluation, reflecting the market's reassessment of its financial health and growth prospects.

In summary, while Manba Finance demonstrates strong topline growth, the underlying financial metrics reveal significant concerns regarding profitability, capital efficiency, and sustainability, which could impact its future performance.