Are Elpro International Ltd latest results good or bad?

Elpro International Ltd's latest financial results for Q2 FY26 highlight significant challenges in its operational performance. The company reported net sales of ₹53.53 crores, reflecting a substantial decline of 46.32% compared to the previous quarter's revenue of ₹99.72 crores. Year-on-year, this figure represents a 74.10% decrease from ₹206.69 crores in Q2 FY25, underscoring the volatility inherent in the real estate sector, where revenue recognition is heavily dependent on project completion milestones. Net profit for the quarter was ₹11.22 crores, which is an 84.90% drop from the previous quarter's profit of ₹74.32 crores and a 65.18% decline from ₹32.22 crores in the same quarter last year. The operating margin, while still healthy at 41.86%, has compressed significantly from 71.09% in Q1 FY26, indicating reduced operating leverage due to lower revenue volumes. The company's return on equity (ROE) has also seen a marked decline, now standing at 3.25%, well below its historical average of 21.93%. This suggests that Elpro International is currently generating minimal returns on shareholder equity, raising concerns about capital efficiency. Additionally, the balance sheet reflects increasing financial strain, with long-term debt rising to ₹374.13 crores, an 85% increase year-on-year. This surge in debt raises questions about the company's financial flexibility and its ability to service this debt, especially given the rising interest costs, which reached a record high of ₹26.42 crores in the latest quarter. Overall, the financial results indicate a period of significant operational and financial challenges for Elpro International Ltd, with the company experiencing a revision in its evaluation amidst these difficulties. The reliance on non-operating income, which constituted a large portion of profit before tax, further complicates the assessment of the company's core business profitability.