Are Reliance Power Ltd latest results good or bad?

The latest financial results for Reliance Power Ltd for the quarter ended December 2025 reveal a complex operational landscape. The company reported a net profit of ₹25.11 crores, which reflects a significant decline of 71.24% compared to the previous quarter. This sharp drop in profitability is attributed to an extraordinarily high tax charge, which reached 74.92%, impacting the overall bottom line despite a relatively stable operating profit before depreciation, interest, tax, and other income (PBDIT) of ₹604.32 crores, resulting in an operating margin of 32.27%. This margin represents the highest level achieved in the past seven quarters, indicating some improvement in operational efficiency. On the revenue front, Reliance Power generated ₹1,872.84 crores, marking a sequential decline of 5.13% from the previous quarter, although it showed a modest year-on-year growth of 1.08%. The quarterly revenue dip is noted to be typical of seasonal variations in power demand, yet the company has maintained revenues above the ₹1,850 crore mark for three consecutive quarters. Despite the positive aspects of operating margin expansion, the company continues to face challenges related to weak return ratios, with a return on equity (ROE) of just 0.49% and a return on capital employed (ROCE) of 3.58%. These figures highlight ongoing structural issues in generating shareholder value. Additionally, the company's elevated debt levels remain a concern, although interest costs have decreased, reflecting ongoing deleveraging efforts. Overall, the financial results underscore a mixed performance for Reliance Power, with operational gains overshadowed by significant challenges in profitability and capital efficiency. The company saw an adjustment in its evaluation, reflecting the complexities of its financial health amidst these operational trends.