Are SRG Housing latest results good or bad?

SRG Housing's latest financial results for Q2 FY26 reflect a notable operational performance, characterized by significant revenue and profit growth. The company reported net sales of ₹44.93 crores, marking a year-on-year growth of 30.95%, which is a substantial increase compared to the previous year. This performance also represents the highest quarterly revenue achieved by the company to date, indicating robust demand for its housing finance products in Rajasthan.
Net profit for the quarter stood at ₹8.25 crores, showing a year-on-year growth of 25.00%. Additionally, the company's profit after tax (PAT) margin improved to 18.36%, reflecting enhanced operational efficiency and cost management. The operating profit before depreciation, interest, and tax (PBDIT) also saw a sequential increase, underscoring the company's ability to scale operations effectively while maintaining profitability.

Despite these positive operational metrics, SRG Housing faces challenges regarding capital efficiency, as evidenced by its return on equity (ROE) of 14.64%, which is below that of industry leaders. The company's debt-to-equity ratio of 2.21 times indicates moderate leverage, yet raises questions about its ability to generate optimal returns on shareholder capital.

The market's perception of SRG Housing has led to an adjustment in its evaluation, reflecting concerns about its valuation relative to operational performance. The absence of institutional investor participation and limited disclosure on asset quality metrics further complicate the investment landscape for the company.

Overall, while SRG Housing's quarterly results demonstrate strong operational momentum, the underlying concerns regarding valuation, capital efficiency, and transparency in asset quality metrics warrant careful consideration for potential investors.