Are Rane (Madras) latest results good or bad?

Rane (Madras) reported its financial results for the quarter ended September 2025, showcasing a notable sequential growth in net sales and net profit. The company achieved net sales of ₹919.31 crores, reflecting a 4.40% increase from the previous quarter, alongside a year-on-year growth of 8.25%. This performance indicates a recovery in demand within the automotive sector, contributing to the highest quarterly revenue in recent periods.
Net profit for the quarter reached ₹21.47 crores, marking a 15.87% increase compared to the previous quarter and a substantial 33.19% growth year-on-year. The profit after tax margin improved to 2.34%, the best performance in seven quarters, suggesting enhanced operational efficiency and cost management.

Operating margins also saw a slight improvement, with a reported margin of 8.57%, up by 8 basis points from the previous quarter. This indicates a stable operational performance despite the challenges faced in the industry.

However, the company continues to grapple with structural profitability issues, as evidenced by an average return on equity of 7.92%, which remains below acceptable levels for a capital-intensive business. The elevated price-to-earnings ratio of 77 times, significantly higher than the industry average, raises questions about the sustainability of its valuation.

In summary, Rane (Madras) demonstrated positive operational trends in its latest quarter, with improvements in revenue and profitability metrics. Nevertheless, the company faces ongoing challenges related to capital efficiency and valuation, leading to an adjustment in its evaluation.