Are Suprajit Engg. latest results good or bad?

Suprajit Engineering's latest financial results for Q2 FY26 present a mixed picture. The company reported net sales of ₹862.92 crores, reflecting a slight sequential decline of 1.60% from the previous quarter, but demonstrating a robust year-over-year growth of 17.43%. This growth is attributed to strong demand in the automotive sector and the company's successful market penetration.
In terms of profitability, net profit reached ₹48.09 crores, which marks a significant sequential increase of 76.54% compared to the previous quarter. This improvement in profit is noteworthy; however, it is essential to consider that it was heavily influenced by a substantial rise in other income, which accounted for a significant portion of profit before tax. The operating profit margin, excluding other income, was reported at 9.47%, down from 9.92% in the previous quarter and significantly lower than the 11.75% achieved in the same quarter last year, indicating ongoing challenges in maintaining operational efficiency.

The company's tax burden remains elevated, with an effective tax rate of 32.25% in Q2 FY26, which, while lower than the previous quarter, still raises concerns about tax planning efficiency. Additionally, employee costs surged by 31.63% year-over-year, contributing to the margin compression observed.

Overall, while Suprajit Engineering has demonstrated strong revenue growth and a notable recovery in net profit, the underlying operational challenges, particularly related to margin compression and high reliance on other income, suggest that the company faces significant hurdles moving forward. The company saw an adjustment in its evaluation, reflecting these complexities in its financial performance.