Are National Standard (India) Ltd latest results good or bad?

National Standard (India) Ltd's latest financial results reveal a complex picture of operational performance. In Q2 FY26, the company reported net sales of ₹17.25 crores, a significant increase from virtually no sales in the previous quarter and a year-on-year rise from ₹3.80 crores in Q2 FY25. However, this surge in revenue is accompanied by troubling operational metrics. The company recorded an operating loss of ₹0.36 crores, leading to a negative operating margin of 2.09%. This indicates that the core business operations are not generating sufficient profit, raising concerns about the sustainability of its earnings.
The net profit for the quarter stood at ₹4.26 crores, which reflects a substantial quarter-on-quarter increase of 330.30%. However, this figure is heavily influenced by other income, which accounted for ₹6.19 crores and constituted 106.19% of the profit before tax. This reliance on non-operating income casts doubt on the underlying health of the company's real estate operations.

The company's return on equity (ROE) of 6.15% is notably below industry standards, suggesting inefficiencies in capital utilization. Additionally, the return on capital employed (ROCE) is alarmingly low at just 0.80%, with a recent figure indicating a negative 1.55%. These metrics highlight significant challenges in generating adequate returns from its capital base.

Furthermore, the financial results indicate a volatility in revenue recognition typical of the real estate sector, with the company's stock performance reflecting a stark contrast to the broader market. National Standard's stock has declined 56.70% over the past year, underperforming the sector significantly.

Overall, the financial data suggests that while National Standard (India) Ltd has experienced a notable increase in sales, the underlying operational weaknesses and heavy dependence on non-core income raise critical questions about the company's long-term viability. The company has seen an adjustment in its evaluation, reflecting these operational challenges and market perceptions.