Are Sunil Healthcare Ltd latest results good or bad?

Sunil Healthcare Ltd has reported its financial results for Q2 FY26, showing a return to profitability with a net profit of ₹1.00 crore, which reflects a quarter-on-quarter increase of 9.89%. The company also achieved net sales of ₹23.52 crores, marking a year-on-year growth of 16.09% and a sequential increase of 3.89%. This marks the third consecutive quarter of revenue growth, indicating a potential stabilization in demand for its gelatin capsule products. The operating margin improved to 16.67%, up from 14.49% in the previous quarter, suggesting enhanced operational efficiency. However, the return on equity (ROE) remains low at 2.55%, indicating challenges in capital efficiency. The company is still facing elevated debt levels, with a debt-to-EBITDA ratio averaging 6.68 times, which raises concerns about its ability to manage financial obligations effectively. Despite these positive indicators, the company has encountered operational challenges, including weak return ratios and minimal institutional interest, which could affect its long-term viability. The absence of institutional investors and a high volatility rate of 56.71% further complicate the investment landscape for Sunil Healthcare. In the most recent quarter ending December 2025, the company experienced a decline in both net sales and net profit, with net sales dropping by 7.14% and net profit decreasing by 41.00% compared to the previous quarter. This downturn highlights the volatility in the company's performance and raises questions about the sustainability of its recovery. Overall, while Sunil Healthcare has shown signs of operational improvement in recent quarters, the persistent challenges related to debt, return ratios, and market dynamics suggest a cautious outlook. The company has seen an adjustment in its evaluation, reflecting the complexities of its financial situation and market position.