Are Skyline Millars Ltd latest results good or bad?

Skyline Millars Ltd's latest financial results for Q2 FY26 indicate a company attempting to restart operations after a prolonged period of inactivity. The reported net sales of ₹0.70 crores reflect a sequential improvement of 29.63% from the previous quarter, marking a return to revenue generation following three quarters of zero sales. However, this revenue base remains modest and insufficient to cover operational costs, as evidenced by the operating loss of ₹0.30 crores, which is only marginally better than the loss reported in Q1 FY26. The operating margin for Q2 FY26 stands at -42.86%, highlighting ongoing challenges in achieving profitability. Additionally, the company recorded a net loss of ₹0.23 crores, which shows a 32.35% improvement compared to the previous quarter, but still underscores the fundamental issues within the business model. The return on equity (ROE) remains low at 2.31%, indicating that the company has struggled to generate meaningful returns on shareholder capital over the past five years. Despite the recent revenue generation, the financial performance reveals deeper operational crises. The reliance on non-operating income to mitigate losses further emphasizes the weaknesses in core business profitability. The company’s capital efficiency metrics are concerning, with a five-year average ROCE of negative 3.72% and a sales-to-capital-employed ratio of just 0.07 times, indicating minimal asset turnover. Skyline Millars' balance sheet shows a debt-free status, with current assets of ₹22.70 crores, but the operating cash flow of negative ₹2.53 crores in FY25 raises questions about the sustainability of this position. The absence of institutional participation and the stability of promoter holding at 71.38% suggest limited market oversight and confidence in the company's operational viability. In summary, while Skyline Millars has resumed revenue generation, the underlying operational trends indicate significant challenges. The company has seen an adjustment in its evaluation, reflecting the ongoing struggles with profitability and cash flow generation. Investors should closely monitor future performance to assess the potential for sustainable operational improvements.