Are N R Agarwal Industries Ltd latest results good or bad?

N R Agarwal Industries Ltd's latest financial results for Q2 FY26 present a complex picture of operational performance. The company reported a net profit of -₹1.47 crores, reflecting a significant decline compared to the previous quarter, where it had achieved a profit of ₹16.55 crores. This downturn in profitability is attributed to negative other income, which shifted dramatically from a gain of ₹25.68 crores in Q1 FY26 to a loss of ₹5.83 crores in Q2 FY26. On the revenue front, N R Agarwal Industries achieved net sales of ₹524.68 crores, marking a quarter-on-quarter increase of 16.04% and a year-on-year growth of 22.47%. This robust top-line growth, however, contrasts sharply with the company's struggles at the bottom line, highlighting a disconnect between revenue generation and profitability. The operating margin for the quarter improved to 8.36%, up from 3.65% in the previous quarter, indicating some operational efficiency gains. However, this margin remains significantly lower than the 13.71% achieved in Q4 FY24, suggesting ongoing pressure on core operational profitability. The company's interest expenses have risen, reflecting an increased debt load associated with its capacity expansion initiatives. Long-term debt rose from ₹480.27 crores in FY24 to ₹545.07 crores in FY25, contributing to higher interest costs that totalled ₹16.95 crores in Q2 FY26. Additionally, depreciation charges have also increased, further compressing profitability. Overall, while N R Agarwal Industries has demonstrated strong revenue growth, the underlying operational challenges, particularly the volatility in profitability and rising costs, raise concerns about the sustainability of its earnings. The company has seen an adjustment in its evaluation, reflecting these mixed operational trends. Investors should monitor upcoming quarters closely to assess whether the company can stabilize its profitability amidst its expansion efforts.