Are RIR Power Electronics Ltd latest results good or bad?

RIR Power Electronics Ltd's latest financial results for Q2 FY26 indicate a notable performance in terms of revenue and profit growth compared to the previous year. The company reported net sales of ₹25.64 crores, reflecting a year-on-year increase of 36.24% and a sequential gain of 22.04% from the previous quarter. The net profit for the same period reached ₹4.23 crores, which is a substantial year-on-year increase of 195.80%. The operating margin also improved to 17.0%, marking the highest level in seven quarters, showcasing effective cost management and operational efficiency. However, the subsequent quarter's results show a different trend, with a decline in both net sales and net profit. For the quarter ended December 2025, net sales decreased by 20.94% to ₹20.27 crores, and net profit fell significantly by 86.03% to ₹0.44 crores. The operating profit margin also saw a reduction, indicating challenges in sustaining the previous quarter's performance. Despite the strong year-on-year growth in Q2 FY26, the subsequent decline in Q3 FY26 raises concerns about the company's ability to maintain its growth trajectory. Additionally, the company continues to face challenges related to capital efficiency, as indicated by its average return on equity (ROE) of 10.15%, which is below the expected benchmark for quality manufacturers. Overall, RIR Power Electronics Ltd has demonstrated strong operational performance in Q2 FY26, but the subsequent results suggest potential volatility and operational challenges moving forward. The company has experienced an adjustment in its evaluation, reflecting the mixed nature of its financial performance and market expectations.