Are EIH Ltd. latest results good or bad?

EIH Ltd.'s latest financial results for Q3 FY26 present a mixed picture of operational performance. The company reported a consolidated net profit of ₹243.03 crores, reflecting a significant sequential recovery of 113.62% from the previous quarter. However, this figure represents an 8.10% decline compared to the same quarter last year, indicating challenges in maintaining profitability year-on-year despite a revenue increase. Revenue for the quarter reached ₹872.89 crores, which is a 45.98% increase from Q2 FY26 and a 9.09% rise compared to Q3 FY25. This growth is attributed to the seasonal demand typical of the hospitality sector during the peak wedding and festive season in India. However, the operational margins tell a more complex story. The operating margin improved to 43.1% from 25.71% in the previous quarter but decreased from 44.59% in Q3 FY25, highlighting margin compression due to rising costs, particularly in labor. The company's profit after tax (PAT) margin also experienced a contraction, dropping to 29.18% from 34.85% year-on-year, which raises concerns about cost pressures that are outpacing revenue growth. Additionally, the return on equity (ROE) stood at 9.95%, indicating that while there is some improvement, it remains below levels that would typically signal strong capital efficiency for a capital-intensive business like hospitality. Overall, EIH's results illustrate a strong sequential recovery in revenue and profit, driven by seasonal factors, but they also reveal underlying operational challenges, particularly in maintaining margins and profitability compared to the previous year. The company saw an adjustment in its evaluation, reflecting these complexities in its financial performance.