Are Adani Enterp. latest results good or bad?

Adani Enterprises' latest financial results for Q2 FY26 reveal a complex operational landscape. The company reported a consolidated net profit of ₹3,198.75 crores, reflecting a significant year-on-year increase of 83.65%. However, this growth was largely driven by favorable tax adjustments and contributions from non-operating income rather than core operational improvements.
In contrast, the company's revenue for the quarter was ₹21,248.51 crores, which represents a decline of 6.01% year-on-year and marks the third consecutive quarter of revenue contraction. This decline indicates ongoing challenges in demand across its diversified portfolio. Additionally, the operating margin improved slightly to 15.56%, up from 15.07% in the previous quarter, yet it remains below the 16.66% achieved in the same quarter last year.

The interest costs have escalated dramatically, nearly doubling year-on-year to ₹1,711.22 crores, highlighting the financial pressures stemming from the company's aggressive debt-funded expansion strategy. This increase in interest expenses, combined with declining revenues and cash flow from operations, raises concerns about the sustainability of the company's profitability.

Furthermore, the company's return on capital employed (ROCE) and return on equity (ROE) remain significantly below industry benchmarks, indicating inefficiencies in capital utilization. The leverage profile has also worsened, with long-term debt rising sharply, which amplifies financial risks.

Overall, while Adani Enterprises has demonstrated substantial profit growth in its latest results, the underlying operational challenges, including revenue declines and high leverage, present significant concerns. The company has experienced an adjustment in its evaluation, reflecting these complexities in its financial performance.