Are Morgan Ventures latest results good or bad?

Morgan Ventures' latest financial results for Q2 FY26 present a mixed picture, highlighting both significant recovery in net profit and ongoing challenges in profitability metrics. The company reported a net profit of ₹5.91 crores, which reflects a substantial sequential recovery from the previous quarter. However, this figure is below the profit achieved in the same quarter last year, indicating a decline in year-on-year performance.
Net sales for the quarter reached ₹13.96 crores, showing a notable quarter-on-quarter increase of 152.44% from ₹5.53 crores in Q1 FY26. Yet, the year-on-year growth of 11.24% from ₹12.55 crores in Sep'24 suggests that the company is facing headwinds in sustaining revenue growth. The operating profit margin remained high at 99.43%, slightly up from the previous year, indicating operational efficiency despite fluctuations in revenue.

A key concern is the significant compression in the profit after tax (PAT) margin, which dropped to 42.34% from 85.06% in the same quarter last year, primarily due to increased interest costs and tax normalization. Interest expenses surged to ₹5.08 crores, reflecting a 36.56% year-on-year increase, which has impacted overall profitability.

The company has demonstrated impressive long-term growth metrics, with five-year sales growth at 71.11% and EBIT growth at 82.71%. However, the recent performance has raised questions about earnings predictability and revenue sustainability, particularly given the extreme volatility in quarterly earnings observed over the past six quarters.

Additionally, Morgan Ventures has maintained a stable promoter holding of 74.80%, but the absence of institutional participation raises concerns about governance and financial transparency. The company's evaluation has seen an adjustment, reflecting the complexities of its operational trends and financial performance.

In summary, while Morgan Ventures has shown a recovery in net profit and maintained strong operational margins, the challenges in sustaining year-on-year growth, alongside increased financial costs and volatility in earnings, present a nuanced investment narrative that requires careful consideration.