Are S H Kelkar & Co. latest results good or bad?

S H Kelkar & Co. has reported its financial results for Q2 FY26, which indicate several operational challenges. The company achieved net sales of ₹553.89 crores, reflecting a modest year-on-year growth of 2.10%. However, this represents a decline of 4.61% compared to the previous quarter. The net profit for the quarter stood at ₹9.18 crores, which marks a significant year-on-year decrease of 76.92%, highlighting severe profitability pressures.
Operating margins have contracted sharply to 9.55%, down 542 basis points from the same quarter last year, and this is the lowest level recorded in seven quarters. The decline in operating profit before depreciation, interest, tax, and other income (PBDIT) to ₹52.67 crores, a 34.81% year-on-year decline, further underscores the company's struggle with margin compression. The PAT margin also fell to just 1.66%, indicating a multi-quarter low.

The financial performance reflects critical concerns, including rising employee costs and elevated interest expenses, which have outpaced revenue growth. The company's interest coverage ratio has deteriorated to 3.79 times, the lowest in recent quarters, raising questions about its financial flexibility.

In terms of market performance, S H Kelkar's stock has underperformed significantly, with a decline of 29.19% over the past year, contrasting sharply with broader market gains. The company has seen an adjustment in its evaluation, reflecting the market's concerns regarding its operational performance and outlook.

Overall, S H Kelkar's latest results indicate a challenging environment, characterized by declining profitability and operational pressures that require management's attention to stabilize and recover.