Are NESCO Ltd latest results good or bad?

NESCO Ltd's latest financial results for the quarter ending December 2025 present a complex picture of growth coupled with operational challenges. The company reported net sales of ₹247.92 crores, reflecting a quarter-on-quarter growth of 3.65% and a year-on-year increase of 20.03%. This marks the highest quarterly revenue in the company's recent history. However, despite this revenue growth, net profit declined to ₹104.64 crores, showing a 12.00% decrease from the previous quarter and a 4.82% decline year-on-year.
The operational margins have come under pressure, with the operating margin (excluding other income) contracting significantly to 50.82%, down 609 basis points from the previous quarter. The profit after tax margin also saw a notable decline, dropping to 42.21%, which is 751 basis points lower than the previous quarter. This indicates that while NESCO is generating higher sales, it is facing challenges in maintaining profitability, likely due to rising operational costs and increased interest expenses, which surged by 42.65% to ₹7.76 crores.

The company has also experienced a decline in other income, which, although it increased sequentially, fell year-on-year, suggesting potential issues with its investment portfolio. Additionally, the return on equity (ROE) and return on capital employed (ROCE) metrics indicate a stagnation in capital efficiency, raising concerns about the company's ability to generate adequate returns relative to its capital investments.

In light of these results, NESCO has seen an adjustment in its evaluation, reflecting the underlying operational difficulties despite achieving record revenues. Investors may need to monitor the company's ability to address these challenges moving forward, particularly regarding margin recovery and cost management.