Are Som Distilleries & Breweries Ltd latest results good or bad?

Som Distilleries & Breweries Ltd's latest quarterly results for Q2 FY26 reflect a complex operational landscape characterized by significant revenue challenges alongside some margin improvements. The company reported net sales of ₹269.59 crores, which represents a decline of 48.98% sequentially and a decrease of 6.95% year-over-year. This drop in sales is attributed to the seasonal nature of the alcoholic beverages industry, particularly impacted by the monsoon season, which typically dampens demand. Despite the revenue contraction, Som Distilleries demonstrated operational resilience with an operating margin of 14.87%, marking an increase of 155 basis points from the previous quarter and 315 basis points year-over-year. This suggests effective cost management and improved operational efficiency, even amidst declining sales figures. The net profit for the quarter was ₹19.50 crores, reflecting a 53.64% decrease sequentially but a 4.28% increase year-over-year, indicating some ability to maintain profitability despite the challenging revenue environment. The financial performance also highlights concerns regarding capital efficiency, as the company's return on equity (ROE) and return on capital employed (ROCE) remain below industry standards. The balance sheet appears relatively healthy, with controlled leverage and no promoter pledging, which supports financial flexibility. However, the company faces challenges in converting its growth into shareholder value, particularly given the extreme seasonality of its business and the low institutional ownership, which suggests limited confidence from sophisticated investors. Overall, the results indicate that while Som Distilleries has managed to improve its margins, the significant drop in sales raises questions about its market position and ability to sustain growth. The company saw an adjustment in its evaluation, reflecting the mixed nature of its operational performance. Investors may need to consider the broader context of seasonal volatility and capital efficiency when assessing the company's future prospects.