Are Shiva Mills latest results good or bad?

Shiva Mills' latest financial results for Q2 FY26 reveal a company facing significant operational challenges. The reported net sales of ₹30.44 crores reflect a substantial year-on-year decline of 36.68%, marking the lowest quarterly revenue in recent periods. This decline underscores the persistent demand issues within the textile sector, compounded by elevated input costs and competitive pressures.
Despite these challenges, there was a sequential improvement in operating margins, which rose to 4.50% from 2.82% in the previous quarter. This improvement was attributed to better cost management and a favorable shift in product mix, resulting in an operating profit of ₹1.37 crores, the highest in recent quarters. However, the company continues to report net losses, with a net loss of ₹0.16 crores, although this represents a 74.19% improvement from the previous quarter's loss.

The financial metrics indicate that Shiva Mills has now experienced four consecutive quarters of losses, highlighting ongoing structural issues that extend beyond cyclical industry pressures. The company’s return on equity (ROE) has turned negative, indicating a decline in shareholder value, while the return on capital employed (ROCE) also reflects a concerning trend, now negative as well.

In terms of market context, the textile sector has faced headwinds, with Shiva Mills significantly underperforming relative to its peers. The company’s valuation metrics suggest a deep discount to book value, reflecting market skepticism about its future profitability and operational viability. Following the results announcement, there was an adjustment in the company's evaluation, indicating a shift in market perception.

Overall, the results paint a challenging picture for Shiva Mills, with persistent revenue declines and ongoing losses overshadowing any marginal improvements in operational efficiency. The outlook remains uncertain, with limited near-term catalysts for recovery in a difficult operating environment.