Are Choksi Asia Ltd latest results good or bad?

Choksi Asia Ltd's latest financial results for the quarter ending December 2025 present a complex picture of operational performance. The company reported a net profit of ₹2.13 crores, reflecting a substantial increase of 57.78% compared to the previous quarter, while revenues decreased by 7.75% quarter-on-quarter to ₹12.26 crores. This revenue decline follows a strong growth trajectory in the previous quarter, indicating some volatility in sales performance. Despite the sequential revenue drop, the year-on-year comparison shows a significant recovery, with revenues up 41.41% from ₹8.67 crores in the same quarter last year. This suggests that Choksi Asia is rebounding from a historically weak sales base. The operating margin for the quarter improved to 14.60%, marking the highest level in eight quarters, which indicates enhanced operational efficiency. Additionally, the profit after tax (PAT) margin rose to 17.37%, benefiting from a notably low effective tax rate during the quarter. However, the company's long-term fundamentals raise concerns. The average return on equity (ROE) over the past five years remains low at 3.17%, and the return on capital employed (ROCE) has been negative, indicating challenges in generating adequate returns on invested capital. Furthermore, the company experienced negative operating cash flow of ₹2.00 crores, driven by increased working capital requirements, which raises questions about the sustainability of its profit growth. Choksi Asia's recent performance has led to an adjustment in its evaluation, reflecting mixed signals across various operational and financial parameters. Investors should be cautious, as the company navigates the balance between recent operational improvements and its historical performance challenges. Overall, while the latest results highlight strong profitability in the short term, the underlying issues related to capital efficiency and cash flow warrant close monitoring.