Are Sandesh Ltd. latest results good or bad?

Sandesh Ltd.'s latest financial results for Q3 FY26 reveal a complex picture characterized by revenue growth alongside significant challenges in profitability. The company reported net sales of ₹77.84 crores, marking a year-on-year increase of 10.38%. This growth suggests some resilience in advertising and circulation revenues despite the broader pressures faced by the media sector. However, the increase in revenue did not translate into improved profitability, as net profit plummeted to ₹3.86 crores, reflecting an 89.89% decline compared to the same quarter last year. The operating margin, excluding other income, fell sharply to 6.12%, down from 22.32% in the previous year, indicating severe margin compression and operational inefficiencies. The operating profit before depreciation, interest, and tax (excluding other income) also saw a significant decline of 69.77% year-on-year, underscoring the challenges in the core publishing business. Additionally, the volatility in other income, which dropped dramatically from ₹47.32 crores to ₹4.26 crores year-on-year, raises concerns about the sustainability of earnings. On a sequential basis, while there was a notable increase in net profit compared to the previous quarter, this comparison is complicated by an exceptionally high other income base in that quarter. The company's reliance on non-operating income for profitability is a critical concern, as it has historically contributed significantly to overall earnings. Moreover, Sandesh's return on equity has deteriorated, with the latest figure at 3.53%, indicating challenges in capital efficiency. The balance sheet remains conservatively structured with zero debt, but the inability to generate adequate returns raises questions about the company's operational effectiveness. Overall, while Sandesh Ltd. demonstrated some revenue growth, the substantial decline in net profit and operating margins highlights significant operational challenges. The company saw an adjustment in its evaluation, reflecting the ongoing concerns regarding its profitability and reliance on volatile income sources. Investors should closely monitor the company's ability to stabilize its core operations and improve margins in the future.