Are HFCL Ltd latest results good or bad?

HFCL Ltd's latest financial results for Q3 FY26 indicate a notable recovery in net profit and revenue compared to the previous quarter. The company reported a net profit of ₹67.86 crore, marking a significant turnaround from a net loss of ₹32.24 crore in Q2 FY26. Revenue for the quarter reached ₹1,043.34 crore, reflecting a sequential increase of 19.78% from the previous quarter. Additionally, the operating margin improved markedly to 18.24%, up from just 3.26% in Q2, driven by better project execution and cost management. However, when viewed on a year-on-year basis, the results reveal challenges. The revenue declined by 4.60% compared to ₹1,093.61 crore in Q3 FY25, indicating softer demand in the telecom infrastructure segment. The net profit also saw a year-on-year decrease of 8.16%. The nine-month performance for FY26 shows continued revenue pressure, with net sales totaling ₹2,914.36 crore, reflecting ongoing difficulties from the previous fiscal year. Despite the quarterly recovery, HFCL's operational efficiency metrics raise concerns. The return on equity (ROE) has fallen to a mere 0.67% in the latest half-year, and the return on capital employed (ROCE) has dropped to 3.95%. The company's debt levels remain elevated, with a significant increase in interest expenses, which reached ₹60.90 crore in Q3 FY26, up from ₹44.88 crore in the same quarter last year. Additionally, the promoter holding has decreased from 35.89% to 28.29% over the past year, raising governance concerns. The decline in institutional investor confidence is further highlighted by a sharp drop in mutual fund holdings. In summary, while HFCL Ltd has shown a recovery in its quarterly performance, the underlying operational challenges and year-on-year declines suggest that the company faces significant hurdles moving forward. The company also experienced an adjustment in its evaluation, reflecting the mixed nature of its financial performance and ongoing concerns regarding capital efficiency and shareholder confidence.