Are Reliance Power latest results good or bad?

Reliance Power's latest financial results for Q2 FY26 indicate a complex operational landscape. The company reported a net profit of ₹87.32 crores, which reflects a significant sequential increase from ₹44.68 crores in Q1 FY26. However, this figure is starkly lower than the ₹2,878.15 crores reported in Q2 FY25, which included substantial one-time gains, highlighting volatility in earnings quality.
Revenue for the quarter reached ₹1,974.03 crores, marking a 4.69% increase from the previous quarter and a 12.17% rise year-on-year. This growth suggests a potential stabilization in operations after a period of turbulence, although it remains below the peak revenues seen in FY24. The operating margin improved to 31.29%, the highest in seven quarters, indicating enhanced operational efficiency.

Despite these positive indicators, concerns persist regarding the company's financial health. The debt to EBITDA ratio stands at 10.25 times, indicating elevated leverage and financial stress. Additionally, a significant portion of the profit before tax—86.02%—was derived from non-operating income, raising questions about the sustainability of earnings.

The company experienced an adjustment in its evaluation, reflecting the mixed nature of its financial performance. While there are signs of operational improvement, the underlying challenges of weak returns on capital, high leverage, and dependence on non-operating income continue to pose risks. Investors should monitor these factors closely as they assess the company's future prospects.