Are Real Touch Fin latest results good or bad?

Real Touch Finance's latest financial results for Q2 FY26 reflect a complex operational landscape. The company reported net sales of ₹8.67 crores, marking a year-on-year growth of 27.13% and a quarter-on-quarter increase of 5.99%. This achievement underscores the company's consistent ability to expand its loan book, evidenced by eight consecutive quarters of revenue growth.
However, the results also reveal significant operational challenges. The net profit for the quarter was ₹2.02 crores, which represents a year-on-year increase of 72.65% and a quarter-on-quarter growth of 50.75%. Despite this profit growth, the operating margin, excluding other income, fell sharply to 49.25%, down from 71.64% in the previous quarter. This decline in operating efficiency raises concerns about the sustainability of profitability, particularly as the operating profit before depreciation, interest, and tax (excluding other income) dropped to its lowest level in recent quarters at ₹4.27 crores.

A notable aspect of the results is the company's heavy reliance on non-operating income, which constituted 92.22% of profit before tax, indicating a concerning dependency that may not be sustainable in the long term. The return on equity (ROE) for the latest quarter was reported at 10.44%, which, while an improvement from the five-year average, suggests there is still room for enhancement in capital efficiency.

In terms of evaluation, Real Touch Finance experienced an adjustment in its evaluation, reflecting the mixed signals from its financial performance. The balance sheet shows a rise in shareholder funds but also an increase in current liabilities, indicating a reliance on short-term borrowing to support growth.

Overall, while Real Touch Finance has demonstrated strong revenue growth, the significant margin compression and dependence on non-core income present critical challenges that the company must address to ensure sustainable profitability moving forward.