Are Rathi Bars latest results good or bad?

Rathi Bars' latest financial results for Q2 FY26 present a mixed operational picture. The company reported a net profit of ₹0.97 crore, reflecting a sequential increase of 15.48% from the previous quarter, which indicates some improvement in profitability. However, revenue for the same period was ₹125.60 crore, showing a sequential decline of 5.45% from ₹132.84 crore in Q1 FY26, although it did achieve a year-on-year growth of 25.68% compared to ₹99.94 crore in Q2 FY25. This revenue decline suggests challenges in maintaining sales momentum despite favorable year-on-year comparisons.
The operating margin improved to 2.89%, up from 2.36% in the previous quarter, indicating enhanced operational efficiency. However, this margin remains low compared to historical levels, highlighting ongoing structural challenges. The profit after tax (PAT) margin also saw a slight improvement to 0.77%, yet it remains thin, which may limit the company's ability to absorb fluctuations in costs or market conditions.

Furthermore, the company experienced a notable increase in interest costs, rising to ₹1.87 crore, which reflects higher debt levels and could impact future profitability. The interest coverage ratio indicates limited financial flexibility, raising concerns about the company's ability to manage its debt effectively.

Overall, while Rathi Bars has shown some positive trends in net profit and operational margins, the decline in revenue and persistent low margins alongside rising interest costs point to significant operational challenges. The company also experienced an adjustment in its evaluation, reflecting the complexities of its financial situation. The outlook remains cautious, with ongoing concerns regarding capital efficiency and competitive positioning in the steel industry.