Are Sanghi Industries Ltd latest results good or bad?

Sanghi Industries Ltd's latest financial results for Q2 FY26 reveal a complex operational landscape characterized by significant revenue growth juxtaposed with persistent losses and high leverage. The company reported net sales of ₹284.93 crores, reflecting an impressive year-on-year growth of 88.07% from ₹151.50 crores in Q2 FY25, alongside a sequential increase of 16.12% from the previous quarter. However, this revenue surge has not translated into profitability, as the company recorded a net loss of ₹116.55 crores, which represents a notable increase in losses compared to the prior quarter's loss of ₹75.40 crores. The operating profit for the quarter stood at ₹24.87 crores, slightly down from ₹25.43 crores in Q1 FY26, and the operating margin contracted to 8.73% from 10.36%. This margin compression indicates ongoing cost pressures within the cement sector, despite the higher sales volumes. Furthermore, the company's debt-to-equity ratio remains concerning at 5.92 times, highlighting a significant leverage issue that continues to undermine its financial stability. The financial data also indicates a negative operating cash flow of ₹248 crores for FY25, which raises concerns about liquidity and the company’s ability to meet its obligations. The return on equity (ROE) has fallen to -106.01%, and the return on capital employed (ROCE) is at -6.86%, both of which are indicative of severe capital inefficiency. In summary, while Sanghi Industries has demonstrated strong revenue growth, the underlying financial challenges, including escalating losses, high debt levels, and deteriorating operational metrics, suggest a precarious situation. The company has experienced an adjustment in its evaluation, reflecting the ongoing difficulties in achieving sustainable profitability amidst a recovering cement market.