Are United Nilgiri latest results good or bad?

United Nilgiri's latest financial results for Q2 FY26 indicate a challenging operational environment, particularly within the tea sector. The company reported net sales of ₹21.13 crores, reflecting a quarter-on-quarter decline of 4.60% from ₹22.15 crores in Q1 FY26. Year-on-year, this figure represents a decrease of 15.41% compared to ₹24.98 crores in Q2 FY25. This marks the third consecutive quarter of year-on-year revenue decline, suggesting ongoing structural challenges beyond seasonal factors.
Net profit for the quarter stood at ₹4.94 crores, which is a significant quarter-on-quarter drop of 38.40% from ₹8.02 crores in the previous quarter. Year-on-year, net profit also decreased by 23.32%. Despite a relatively healthy PAT margin of 23.38%, there was a contraction of 2.40 percentage points compared to the previous year. The operating profit margin, excluding other income, was reported at 21.34%, down from 30.07% in the previous quarter.

The company's reliance on non-operating income is notable, with ₹2.28 crores from this source constituting 38.71% of profit before tax, raising concerns about the sustainability of earnings generated from core operations. Additionally, the return on equity (ROE) for the latest fiscal year was recorded at 10.34%, which, while an improvement from the five-year average, remains modest by industry standards.

Overall, the results reflect a combination of revenue pressures and margin compression, indicating that United Nilgiri is navigating significant operational challenges. The company has seen an adjustment in its evaluation, which may reflect these ongoing difficulties. Investors may want to consider these factors when assessing the company's future prospects.