Are Venky's (India) latest results good or bad?

Venky's (India) has reported troubling financial results for the quarter ended September 2025, indicating significant operational challenges. The company experienced a net loss of ₹26.53 crores, a stark contrast to the profit of ₹15.83 crores reported in the previous quarter. This represents a substantial decline in profitability, raising concerns about the sustainability of its business model in the current environment.
Net sales for the quarter were ₹800.87 crores, reflecting a 7.50% decrease from ₹865.83 crores in the prior quarter, although there was a modest year-on-year growth of 3.44% compared to ₹774.20 crores in the same quarter of the previous year. Despite this slight annual improvement, the overall revenue growth was overshadowed by escalating operational costs, leading to an operating profit before depreciation, interest, tax, and other income (PBDIT excl OI) of -₹31.14 crores, which is the lowest recorded in tracked quarters.

The operating margin, excluding other income, fell to -3.89%, marking a significant decline from a positive margin of 2.72% in the previous quarter. Similarly, the profit after tax (PAT) margin also turned negative at -3.31%, down from 1.83% in the prior quarter. These metrics highlight severe cost management issues and the inability to pass on rising input costs to customers, resulting in substantial margin compression.

On a half-yearly basis, for H1 FY26, Venky's reported net sales of ₹1,666.70 crores, a 5.27% increase year-on-year, yet the cumulative net profit stood at merely -₹10.70 crores, a drastic decline from ₹82.94 crores in H1 FY25. This reflects a broader trend of deteriorating profitability, with return on equity (ROE) dropping sharply to 3.88% from a historical average of 11.31%.

The company has also seen an adjustment in its evaluation, reflecting the ongoing operational distress and investor skepticism regarding its recovery prospects. The balance sheet remains relatively healthy, with no long-term debt, but the operational challenges and negative financial trajectory raise significant concerns about future performance and value creation potential.

Overall, Venky's (India) faces a critical juncture, needing to restore operational profitability and address the underlying issues affecting its margins and overall financial health.