Are S H Kelkar & Company Ltd latest results good or bad?

S H Kelkar & Company Ltd's latest financial results for the quarter ended December 2025 reveal a complex operational landscape. The company reported net sales of ₹583.80 crores, reflecting a sequential growth of 5.40% from the previous quarter and a year-on-year increase of 7.47%, marking the highest quarterly revenue in its recent history. This indicates a strong top-line performance amidst challenging market conditions. However, the operating margins, excluding other income, contracted to 9.65%, down from 11.94% in the same quarter last year. This decline highlights ongoing cost pressures that have affected the specialty chemicals sector, suggesting that while sales are growing, profitability is being squeezed due to rising input costs and pricing pressures. Net profit for the quarter surged to ₹32.66 crores, representing a dramatic 255.77% increase from the previous quarter, which had seen a significant drop in profit. This recovery, while notable, must be contextualized against a weak base from Q2 FY26. Year-on-year, net profit improved by 86.42%, but it remains below historical performance levels, particularly when compared to exceptional margins recorded in previous quarters. The company's return on equity (ROE) has fallen to 7.03%, significantly below its five-year average, indicating challenges in capital efficiency. Similarly, the return on capital employed (ROCE) has dropped to 7.60%, raising concerns about the adequacy of returns on invested capital. The debt-to-equity ratio has also climbed to 0.67 times, reflecting increased leverage, which could pose risks to financial stability. Overall, S H Kelkar's results illustrate a company experiencing a recovery in sales and profit after a challenging period, yet facing significant operational hurdles that impact margins and capital efficiency. The company saw an adjustment in its evaluation, reflecting these underlying challenges and the need for sustained improvement in operational metrics to enhance investor confidence.