Are Mercury EV-Tech Ltd latest results good or bad?

Mercury EV-Tech Ltd's latest financial results for Q3 FY26 indicate notable operational challenges. The company reported net sales of ₹25.29 crores, reflecting a quarter-on-quarter contraction of 25.64%, which is significantly below the previous four-quarter average. This decline raises concerns about demand sustainability and execution capabilities within the competitive electric vehicle sector. Consolidated net profit also saw a substantial decrease, falling to ₹0.85 crores, a 50.58% drop compared to the prior quarter. This marks a significant reversal from the growth momentum observed in the first half of FY26. The operating profit margin, which decreased to 7.51%, suggests pressures on both revenue generation and cost management, indicating potential challenges in maintaining profitability. Despite a nine-month FY26 performance showing a year-on-year sales growth of 38.88%, the sharp deceleration in Q3 raises questions about the sustainability of this growth. The company's return on equity stands at a modest 3.14%, reflecting poor capital efficiency, which is concerning for long-term shareholder value creation. Additionally, the company's financial metrics reveal a high working capital intensity, with cash flow from operations showing a significant outflow, primarily due to increased working capital. This situation suggests that Mercury EV-Tech is tying up substantial capital in inventory and receivables, further straining its financial position. Overall, Mercury EV-Tech's recent results highlight a critical juncture for the company, with significant operational volatility and deteriorating profitability metrics. The company saw an adjustment in its evaluation, reflecting the ongoing challenges it faces in navigating the competitive landscape of the electric vehicle market. Investors and stakeholders should closely monitor the company's ability to stabilize its financial performance in the upcoming quarters.