Are SPML Infra Ltd latest results good or bad?

SPML Infra Ltd's latest financial results for Q3 FY26 indicate a notable recovery in operational performance, characterized by significant growth in both net sales and net profit. The company reported net sales of ₹229.76 crores, reflecting a year-on-year growth of 22.30%, which marks the highest quarterly revenue in at least two years. This growth is particularly significant given the challenges faced in FY25, where the company experienced a substantial contraction in sales. Net profit for the quarter reached ₹20.34 crores, representing a year-on-year increase of 104.63%. This strong profit growth is attributed to improved operational efficiency, as evidenced by an operating margin of 10.79%, the highest recorded in the last eight quarters. The increase in operating profit before depreciation, interest, and tax (PBDIT) to ₹24.79 crores further underscores enhanced project execution and cost management. However, despite these positive developments, SPML Infra continues to face challenges related to capital efficiency. The company's return on equity (ROE) stands at 6.12%, which is below the average for its peers, indicating that it is generating relatively low returns on shareholder capital. Additionally, the return on capital employed (ROCE) is also low at 3.42%, raising concerns about the effectiveness of capital utilization. The interest expense has shown significant volatility, increasing sharply to ₹5.31 crores from ₹0.40 crores in the previous quarter, which could indicate potential working capital pressures. The company's balance sheet has shown some improvement, with a debt-to-equity ratio of 0.44 times, suggesting progress in deleveraging. In summary, while SPML Infra Ltd's Q3 FY26 results indicate a positive operational turnaround with strong revenue and profit growth, the underlying issues related to capital efficiency and financial stability remain critical concerns. The company has seen an adjustment in its evaluation, reflecting these mixed operational trends and ongoing challenges.