Are Narendra Properties Ltd latest results good or bad?

Narendra Properties Ltd's latest financial results reveal a complex picture characterized by significant operational challenges. In the quarter ended December 2025, the company reported a net profit of ₹0.80 crores, reflecting a notable improvement in net profit margins to 22.04%. However, this increase is juxtaposed against a backdrop of extreme revenue volatility, with the company experiencing zero sales in alternating quarters. This cyclical nature raises concerns about the sustainability of its business model. The reported revenue for Q3 FY26 was ₹3.63 crores, which, while an improvement from the previous quarter's zero revenue, highlights the inconsistency in sales generation. Furthermore, the operating profit before other income was negative at ₹0.04 crores, indicating that core operations are not generating sufficient profit. The company's reliance on other income, which constituted 24.24% of total income in this quarter, further complicates the assessment of its financial health. Over a nine-month period, revenues showed a growth of 72.90% year-on-year, totaling ₹6.38 crores. However, this figure is misleading due to the lumpy nature of revenue recognition typical in project-based real estate development. The operating margin, excluding other income, remained negative at -1.1%, suggesting ongoing difficulties in achieving profitability from core activities. The return on equity (ROE) has seen a significant decline, now at 4.12%, compared to an average of 14.50% previously. This deterioration in profitability metrics is concerning, particularly for a capital-intensive sector like real estate. The balance sheet remains relatively strong, with no long-term debt and a net cash position, but the inability to generate positive returns on capital employed raises questions about the effective deployment of resources. In the context of the broader real estate market, which has shown resilience, Narendra Properties has underperformed, reflecting investor skepticism regarding its operational capabilities. The company has also seen a revision in its evaluation, indicating a shift in how its financial health is perceived. Overall, while there are some positive indicators such as recent profitability improvements and a stable balance sheet, the underlying operational weaknesses and dependency on non-core income sources present significant risks for the company's future performance.