Are HPL Electric & Power Ltd latest results good or bad?

HPL Electric & Power Ltd's latest financial results for the quarter ending December 2025 reveal a complex operational landscape characterized by notable revenue growth alongside challenges in profitability. The company reported net sales of ₹473.92 crores, reflecting a robust year-on-year growth of 20.75%, which underscores its ability to capture market share and expand its revenue base. This performance marks the highest quarterly revenue for the company, indicating a positive trend in sales momentum. However, the net profit for the same period was ₹19.45 crores, which represents a year-on-year increase of 7.58%. This growth in profit is significantly lower than the revenue increase, suggesting that while sales are rising, the company is facing operational challenges that are impacting its bottom line. Specifically, the sequential decline in net profit by 12.66% indicates margin pressures that may be attributed to rising interest costs and increased depreciation expenses, which outpaced revenue growth. The operating margin remained relatively stable at 15.14%, yet the PAT margin contracted to 4.12%, reflecting a decline of 103 basis points. This margin compression, despite stable operating margins, points to the effects of non-operating expenses that are eroding profitability. The increase in interest expenses and depreciation suggests that the company's recent capital investments have not yet yielded the expected returns, raising concerns about operational efficiency. In terms of financial health, HPL Electric's return on equity (ROE) stands at a modest 5.48%, indicating weak shareholder value creation, while the return on capital employed (ROCE) is also below industry expectations at 9.63%. These metrics highlight fundamental concerns regarding the company's ability to generate adequate returns on its capital base. The company's evaluation has seen an adjustment, reflecting the mixed performance and underlying challenges. The absence of institutional interest, with no mutual fund holdings and declining foreign institutional investor participation, further underscores the cautious sentiment surrounding the stock. Overall, HPL Electric's results indicate a company with strong revenue growth but significant operational hurdles that are impacting profitability, raising questions about its future performance and capital efficiency.