Are Optimus Finance Ltd latest results good or bad?

Optimus Finance Ltd's latest financial results for Q2 FY26 indicate a complex operational landscape. The company reported consolidated net sales of ₹46.11 crores, reflecting a year-on-year growth of 27.91% and a sequential increase of 15.83%. This growth marks a strong top-line performance, showcasing the company's ability to expand its revenue base effectively. However, the consolidated net profit stood at ₹1.72 crores, which is a 19.44% increase quarter-on-quarter and a 23.74% increase year-on-year. While this suggests improved operational efficiency, it is important to note that the standalone net profit was significantly higher at ₹2.91 crores, indicating that the consolidated figure is only 59% of the standalone earnings. This discrepancy raises concerns about the sustainability and quality of profitability at the group level. Operating margins, excluding other income, contracted to 8.02%, down from 9.67% in the previous quarter, while the profit after tax (PAT) margin slightly improved to 6.31%. This indicates persistent margin pressures despite revenue growth. The company's return on equity (ROE) averaged at 12.32%, which is below the benchmarks typically associated with high-quality financial services, suggesting challenges in capital efficiency. Furthermore, the latest quarterly ROE of 9.95% points to a declining trend that warrants close monitoring. In terms of cash flow, the company reported negative operating cash flow of ₹10.00 crores for FY25, despite a profit before tax of ₹11.00 crores. This divergence raises questions about the quality of earnings and the sustainability of its operational model. The shareholding structure remains stable, with no institutional participation, which may limit liquidity and heighten vulnerability to market sentiment. The stock has experienced significant underperformance over the past year, with a decline of 31.69% compared to the Sensex's gain. Overall, while Optimus Finance Ltd has demonstrated strong revenue growth, the underlying issues related to cash flow, profitability quality, and capital efficiency suggest that investors should exercise caution and closely monitor future developments. The company has seen an adjustment in its evaluation, reflecting the complexities of its operational and financial landscape.