Are IZMO Ltd latest results good or bad?

IZMO Ltd's latest financial results present a complex picture, highlighting both operational improvements and ongoing challenges. In the quarter ended September 2025, the company reported a net profit of ₹12.56 crores, reflecting a significant sequential increase of 109.33% compared to the previous quarter. This growth was accompanied by a revenue increase of 6.37% QoQ, reaching ₹60.11 crores, driven by enhanced execution in its technology divisions. Additionally, the operating margin improved to 22.48%, marking a notable rise from 17.11% in the prior quarter, indicating better operational efficiency and cost management. However, when viewed on a year-on-year basis, the results reveal a decline in net profit by 57.99% and a modest revenue growth of only 2.66%. This year-on-year profit drop is largely attributed to an exceptionally high other income figure from the previous year, which has since normalized. The company’s reliance on non-operating income raises concerns about the sustainability of its profitability. For the half-year period ending in September 2025, IZMO reported net sales of ₹116.62 crores, showing approximately 10% growth over the same period last year. Nevertheless, net profit for this half-year was significantly lower at ₹18.56 crores, down from ₹35.93 crores in the previous year, again reflecting the normalization of other income levels. Despite the sequential improvements in profitability, the company faces challenges regarding revenue growth and capital efficiency. The return on equity (ROE) remains low at 9.34%, and the return on capital employed (ROCE) is even more concerning at 5.86%. These metrics indicate that IZMO is struggling to generate adequate returns on shareholder capital, raising questions about its operational efficiency. The company's balance sheet is a positive aspect, as it remains virtually debt-free, providing financial flexibility. However, the volatility in other income and the lack of institutional interest, as evidenced by zero mutual fund holdings and declining foreign institutional investor stakes, suggest skepticism regarding the company's long-term prospects. Overall, IZMO Ltd's recent performance indicates a mix of operational recovery and underlying challenges, leading to an adjustment in its evaluation. Investors should closely monitor the company's ability to sustain revenue growth and improve capital efficiency in the coming quarters.