Are Godrej Properties Ltd latest results good or bad?

Godrej Properties Ltd's latest financial results for Q3 FY26 reveal a complex situation characterized by significant operational challenges. The company reported a consolidated net profit of ₹405.08 crores, which reflects a year-on-year increase of 20.84%. However, this profit was achieved amidst a backdrop of declining net sales, which fell to ₹740.38 crores, representing a 32.28% decrease compared to the same quarter last year. While there was a sequential recovery in sales from the previous quarter, the overall trend indicates volatility in revenue generation. The operating profit before depreciation, interest, tax, and other income was negative ₹512.74 crores, leading to an operating margin of negative 69.25%. This marks a deterioration from the previous quarter and highlights ongoing challenges in the core business operations. The reliance on other income, which amounted to ₹1,209.67 crores, raises concerns about the sustainability of profitability, as it constituted a substantial portion of the profit before tax. On a half-yearly basis, the company reported net sales of ₹1,174.94 crores for H1 FY26, down significantly from ₹1,832.23 crores in H1 FY25, while net profit for the same period was ₹1,005.20 crores, up 17.61% from the previous year. This further emphasizes the disconnect between operational performance and reported profitability. The company's return on equity (ROE) stands at 6.57%, which is below the expectations for quality real estate developers, indicating inefficiencies in capital utilization. Additionally, the average return on capital employed (ROCE) is negative, suggesting that the company is not generating adequate returns from its capital base. In terms of evaluation, Godrej Properties saw an adjustment in its evaluation, reflecting the challenges highlighted in its financial performance. The balance sheet shows an increase in shareholder funds, but the ability to deploy this capital effectively remains questionable given the persistent negative operating margins. Overall, Godrej Properties Ltd's financial results indicate a company grappling with significant operational difficulties, with a heavy reliance on non-operating income to sustain profitability, raising critical questions about the long-term viability of its business model.