Are Modi Rubber latest results good or bad?

The latest financial results for Modi Rubber reveal a complex situation characterized by significant revenue growth alongside persistent operational challenges. In the quarter ending September 2025, the company reported net sales of ₹7.81 crores, reflecting a year-on-year growth of 20.15% and a sequential increase of 10.00% from the previous quarter. This positive trend in revenue is noteworthy; however, it is overshadowed by the company's ongoing struggles in generating operating profit.
The operating profit before depreciation, interest, and tax (excluding other income) was recorded at a negative ₹4.16 crores, indicating continued core business losses. While this represents a slight improvement from the previous quarter's loss of ₹5.08 crores, it is a deterioration compared to the ₹3.91 crores loss in the same quarter last year. This consistent negative operating profit highlights the company's challenges in achieving sustainable profitability despite top-line growth.

Additionally, the consolidated net profit for the quarter was ₹4.56 crores, which, although positive, was heavily reliant on other income, constituting 71.71% of profit before tax. The decline in other income by 26.52% quarter-on-quarter and 35.63% year-on-year raises concerns about the quality and sustainability of earnings. The cumulative net profit for the first half of FY26 also saw a significant decline of 27.99% compared to the previous year.

Modi Rubber's financial metrics indicate a weak return on equity (ROE) of 3.14% and a negative return on capital employed (ROCE) of 4.15%, suggesting poor capital efficiency. The high employee cost, which accounted for 55.7% of net sales in the latest quarter, further complicates the company's operational efficiency.

In summary, while Modi Rubber has demonstrated an ability to grow revenues, the underlying operational weaknesses and reliance on non-operating income raise critical questions about its long-term viability. The company has experienced an adjustment in its evaluation, reflecting the market's perception of these ongoing challenges.