Are GMR Power & Urban Infra Ltd latest results good or bad?

GMR Power & Urban Infra Ltd's latest financial results for Q3 FY26 present a complex picture. The company reported consolidated net sales of ₹1,868.96 crores, reflecting a sequential growth of 3.24% and a year-on-year increase of 16.00%, indicating strong demand for its Engineering, Procurement, and Construction (EPC) services. However, this topline growth was overshadowed by a consolidated net loss of ₹168.53 crores, a significant decline from the previous quarter's profit of ₹888.39 crores, marking a notable deterioration in profitability. The operating profit, excluding other income, was ₹368.77 crores, which showed a slight increase from ₹363.43 crores in the prior quarter. Nonetheless, the operating margin contracted to 19.73%, down from 20.08% in Q2 FY26, continuing a trend of margin erosion over the past several quarters. This decline in operating margin raises concerns about the company's operational efficiency and pricing power. Interest costs, while declining by 14.97% quarter-on-quarter to ₹379.24 crores, still consumed a substantial portion of the operating profit, resulting in an operating profit to interest coverage ratio of just 0.97 times. This precarious financial position indicates limited capacity to absorb further operational setbacks or fluctuations in interest rates. The company's capital structure remains heavily leveraged, with a debt-to-equity ratio averaging 7.45 times and long-term debt of ₹8,770.47 crores as of March 2025. This high leverage continues to exert pressure on profitability, despite some operational improvements. Overall, GMR Power & Urban Infra Ltd's financial results highlight a combination of strong revenue growth alongside significant challenges in profitability and financial stability. The company has experienced an adjustment in its evaluation, reflecting the ongoing volatility in its financial performance and structural issues related to its capital management. Investors should closely monitor these factors as they assess the company's future prospects.