Are CARE Ratings Ltd latest results good or bad?

CARE Ratings Ltd's latest financial results for the quarter ending December 2025 reveal a mixed performance characterized by year-on-year growth but notable sequential declines. The consolidated net profit reached ₹35.90 crores, reflecting a year-on-year growth of 29.14%, which indicates improved operational leverage and margin expansion compared to the same quarter last year. The net sales for the quarter amounted to ₹112.12 crores, marking a year-on-year increase of 16.33%, demonstrating healthy underlying demand for the company's rating services. However, when comparing sequentially to the previous quarter, the results show a decline. Net sales decreased by 17.78% from ₹136.37 crores in the prior quarter, and consolidated net profit fell by 36.65% from ₹56.67 crores. This sharp decline can be attributed to the unusually strong performance in the previous quarter, creating a challenging base for comparison. The operating margin, excluding other income, was reported at 35.98%, which is a decrease of 1,418 basis points from the previous quarter, indicating reduced operating leverage as revenue moderated. The company's financial performance underscores the inherent volatility of its business model, characterized by lumpy revenue recognition patterns. Despite the sequential declines, the year-on-year growth figures suggest a resilient demand environment within the capital markets sector. Additionally, employee costs increased, reflecting ongoing investments in talent acquisition, while other income provided a steady cushion to operating performance. Overall, the results highlight CARE Ratings' ability to generate growth in a challenging environment, although the sequential performance raises questions about the sustainability of such growth amidst the cyclical nature of the rating agency business. The company saw an adjustment in its evaluation, reflecting these dynamics.