Are Sri Lakshmi Saraswathi Textiles (Arni) Ltd latest results good or bad?

The latest financial results for Sri Lakshmi Saraswathi Textiles (Arni) Ltd for the quarter ending December 2025 reveal significant operational challenges and ongoing financial distress. The company reported net sales of ₹21.14 crores, reflecting a quarter-on-quarter decline of 9.66% and a year-on-year contraction of 20.65%. This marks the lowest quarterly revenue since June 2024, indicating persistent demand weakness and operational inefficiencies. The net loss for the quarter was ₹4.88 crores, which represents a substantial quarter-on-quarter decline of 47.88% compared to the previous quarter. The operating margin stood at -13.67%, the worst performance in five quarters, highlighting the company’s struggle to manage costs effectively amidst declining revenues. This negative operating margin has now persisted for eight consecutive quarters, underscoring deep-rooted structural issues within the business. Additionally, the company has accumulated losses of ₹11.95 crores on revenues of ₹66.52 crores for the nine-month period of FY26, showing only a marginal improvement in loss magnitude compared to the previous year. The balance sheet reflects a precarious position, with negative shareholder equity of ₹68.59 crores, indicating that liabilities exceed assets, which raises serious questions about the company's viability. The financial data also indicates that the company has faced substantial cash flow distress, generating negative operating cash flow of ₹19.00 crores in FY25, a stark contrast to the positive cash flow of ₹3.00 crores in FY24. This situation has been exacerbated by high current liabilities of ₹105.63 crores against current assets of only ₹21.30 crores, suggesting severe working capital challenges. Overall, the results illustrate a company grappling with significant operational and financial hurdles, leading to an adjustment in its evaluation. The ongoing negative trends in sales, profitability, and cash flow highlight the urgent need for strategic interventions to address these challenges.