Are Dhanlaxmi Cotex Ltd latest results good or bad?

Dhanlaxmi Cotex Ltd's latest financial results for Q3 FY26 reveal a complex picture of performance. The company reported net sales of ₹4.82 crores, reflecting a sequential growth of 10.55% from the previous quarter and a significant year-on-year increase of 108.66%. However, this revenue growth has not translated into operational profitability, as the operating profit before depreciation, interest, and tax (excluding other income) remained negative at ₹0.01 crores, resulting in an operating margin of -0.21%. The net profit for the quarter was ₹0.70 crores, which marked a substantial increase of 159.26% compared to the previous quarter. Nonetheless, this profitability was heavily reliant on other income, which amounted to ₹0.91 crores, indicating that the core operations continue to struggle. Over the nine-month period ending December 2025, net sales declined by 21.80% year-on-year, and net profit for the same period was only ₹0.22 crores, also down 21.80% compared to the previous year. The company's return on equity (ROE) stands at a low 3.81%, raising concerns about capital efficiency and the ability to generate shareholder value. Additionally, the return on capital employed (ROCE) is negative at -3.03%, further highlighting operational challenges. Despite the reported revenue growth, the overall financial trajectory suggests persistent operational weaknesses, with negative operating margins in four of the last seven quarters. The company's evaluation saw an adjustment, reflecting these ongoing challenges. Investors should remain cautious as the company must demonstrate sustainable profitability from its core operations to regain confidence.