Are Primo Chemicals Ltd latest results good or bad?

Primo Chemicals Ltd's latest financial results for Q2 FY26 indicate a complex operational landscape characterized by both sequential stabilization and year-on-year challenges. The company reported consolidated net sales of ₹134.74 crores, reflecting a quarter-on-quarter decline of 5.07% from ₹141.94 crores in the previous quarter, although it achieved a slight year-on-year growth of 0.28% compared to ₹134.36 crores in Q2 FY25. This marginal revenue growth is juxtaposed against a significant 16.41% increase in the preceding quarter, suggesting potential weakening demand dynamics in the caustic soda market. In terms of profitability, the consolidated net profit stood at ₹4.16 crores, which shows a modest quarter-on-quarter improvement of 1.96% from ₹4.08 crores in Q1 FY26. However, this figure is substantially lower than the ₹12.93 crores achieved in Q2 FY25, marking a year-on-year decline of 67.83%. The operating margin has also contracted to 11.35% from 14.37% in the previous quarter, indicating rising input costs and operational pressures that have impacted profitability. The company's return on equity (ROE) has fallen to 0.93%, significantly below its five-year average of 13.92%, reflecting acute profitability pressures. Additionally, the reliance on non-operating income, which constituted 262.35% of profit before tax in Q2 FY26, raises concerns about the sustainability of earnings quality. Overall, Primo Chemicals Ltd's performance highlights operational challenges, including margin compression and reliance on non-core income, which could impact future profitability. The company has experienced an adjustment in its evaluation, reflecting the ongoing pressures within the commodity chemicals sector and the specific challenges faced by the business.