Are Shivam Autotech Ltd latest results good or bad?

Shivam Autotech Ltd's latest financial results for Q2 FY26 reveal a complex operational landscape. The company reported net sales of ₹113.23 crores, reflecting a sequential growth of 24.80% from the previous quarter, although this still represents a year-on-year decline of 5.98% compared to ₹120.43 crores in Q2 FY25. This revenue recovery appears tactical, as it falls short of the historical peak of ₹123.74 crores achieved in March 2024. Operating profitability showed some improvement, with operating profit (excluding other income) rising to ₹10.26 crores from ₹5.31 crores sequentially, resulting in an operating margin of 9.06%. However, this margin remains below the 12.07% recorded in March 2024, indicating ongoing operational challenges. Despite these operational improvements, the company continues to face significant financial distress, as evidenced by a net loss of ₹12.42 crores for the quarter, which is a reduction from the previous quarter's loss of ₹17.66 crores. The interest expenses of ₹13.11 crores exceeded the operating profit, leading to a structural profitability deficit. This situation raises concerns about the company's financial sustainability and capital structure viability. Shivam Autotech's debt burden is particularly alarming, with a debt-to-equity ratio of 192.05 times as of H1 FY26, indicating severe over-leverage. The erosion of shareholder equity from ₹138.55 crores in March 2022 to ₹31.48 crores by March 2025 underscores the critical financial challenges the company faces. In summary, while Shivam Autotech has shown some operational recovery in terms of revenue and operating margins, the persistent net losses and unsustainable debt levels highlight significant risks to its financial health. The company saw an adjustment in its evaluation, reflecting these ongoing challenges and the need for substantial restructuring to ensure future viability.