Are Datamatics Glob. latest results good or bad?

Datamatics Global's latest financial results for the quarter ended September 2025 reflect a significant operational performance, showcasing strong profit growth and improved margins. The company reported net sales of ₹490.23 crores, which represents a 4.85% increase from the previous quarter and a notable 20.52% growth year-on-year. This consistent top-line expansion indicates the company's ability to capture market share within the competitive software and consulting services sector.
In terms of profitability, Datamatics Global achieved a net profit of ₹63.24 crores, marking a 25.53% sequential increase and a substantial 49.29% rise compared to the same quarter last year. The operating profit before depreciation, interest, and tax (excluding other income) reached ₹88.83 crores, reflecting a 16.99% increase quarter-on-quarter. The operating margin improved to 18.12%, the highest level in at least seven quarters, indicating enhanced operational efficiency and effective cost management.

Despite these positive results, the company faces challenges regarding margin sustainability. Historical data reveals a decline in operating margins over the past few years, raising questions about the ability to maintain the recent improvements. Employee costs, which consume a significant portion of revenues, remain a primary concern, particularly in the context of ongoing wage inflation pressures within the industry.

Additionally, Datamatics Global's evaluation has undergone an adjustment, reflecting the market's recognition of its growth trajectory and operational performance amidst elevated valuations. The company's capital efficiency metrics, including a return on equity (ROE) of 15.19% and a return on capital employed (ROCE) of 25.25%, highlight its effective utilization of resources to generate profits.

Overall, while Datamatics Global's Q2 FY26 results demonstrate strong operational momentum and record profitability, the sustainability of these margins and the company's valuation remain critical factors for investors to monitor moving forward.