Are Sandhar Technologies Limited latest results good or bad?

Sandhar Technologies Limited's latest financial results for Q2 FY26 indicate a notable performance characterized by strong revenue growth and significant profit increases. The company reported net sales of ₹1,270.37 crores, reflecting a year-on-year growth of 29.08% and a quarter-on-quarter increase of 16.54%. This marks the highest quarterly revenue in the company's history, driven by robust demand across its product portfolio. The net profit for the quarter surged to ₹73.38 crores, representing an impressive year-on-year growth of 83.36% and a sequential jump of 161.98%. This substantial profit growth was supported by improved profit after tax (PAT) margins, which expanded to 5.78% from 4.07% in the same quarter last year. However, operating margins (excluding other income) contracted slightly to 9.29% from 10.04% year-on-year, indicating some pressure on operational efficiency. The financial performance reflects Sandhar's ability to capitalize on improving automotive demand while managing operational complexities. The company also benefited from a significant increase in other income, which contributed notably to overall profitability. However, the high proportion of other income relative to profit before tax raises questions about the sustainability and quality of earnings. On a half-yearly basis, Sandhar reported net sales of ₹2,360.46 crores and a consolidated net profit of ₹101.39 crores, indicating solid earnings quality with historically strong operating cash flows. The company has demonstrated improving capital efficiency, with a return on capital employed (ROCE) reaching 13.29%, although the return on equity (ROE) remains modest at 8.93%, trailing the peer group average. Overall, Sandhar Technologies Limited's recent results showcase a strong operational performance, but there are areas of concern regarding earnings quality and return ratios. The company saw an adjustment in its evaluation, reflecting these mixed signals in its financial health. Investors should continue to monitor the sustainability of revenue growth, margin dynamics, and working capital management as key indicators of future performance.