Are Vikram Kamats Hospitality Ltd latest results good or bad?

Vikram Kamats Hospitality Ltd's latest financial results for Q2 FY26 present a complex picture characterized by significant revenue growth juxtaposed with severe profitability challenges. The company reported net sales of ₹12.00 crores, reflecting a sequential decline of 7.34% from the previous quarter but a notable year-on-year increase of 42.18%. However, the net profit for the same quarter plummeted to ₹0.03 crores, representing a substantial drop of 72.73% quarter-on-quarter and 75.00% year-on-year, primarily due to an exceptionally high tax rate of 90.00% that severely impacted the bottom line. The operating margin, excluding other income, stood at 21.0%, which is a decrease of 85 basis points from the prior quarter. This decline, alongside a profit after tax margin of just 0.08%, indicates ongoing struggles with profitability despite the revenue growth. The company's return on capital employed (ROCE) has deteriorated to 2.01%, reflecting weak capital efficiency, while the return on equity (ROE) is similarly low at 0.81%. Additionally, Vikram Kamats faces structural challenges, including high leverage with a debt-to-EBITDA ratio averaging 4.76 times and a net debt-to-equity ratio of 1.06. The company has also reported negative cash flow from operations, which raises concerns about its financial stability. In terms of market performance, Vikram Kamats has underperformed significantly compared to the broader leisure services sector, with a negative return of 24.01% over the past year against the Sensex's 9.01% gain. This underperformance highlights company-specific challenges that extend beyond general industry trends. Overall, the financial data indicates that while Vikram Kamats has achieved notable revenue growth, the underlying profitability issues and high tax burden present significant operational challenges. The company has experienced an adjustment in its evaluation, reflecting these ongoing difficulties.