Are Starteck Finance Ltd latest results good or bad?

Starteck Finance Ltd's latest financial results for Q2 FY26 present a complex picture. The company reported a net profit of ₹7.36 crores, reflecting a significant quarter-on-quarter growth of 107.91% and a year-on-year increase of 105.01%. However, this profit surge was largely driven by a substantial rise in non-operating income, which constituted 78.49% of profit before tax, raising concerns about the sustainability and quality of earnings. The core interest income, which is a more reliable indicator of operational performance, grew modestly by 20.72% quarter-on-quarter to ₹9.44 crores, indicating that the underlying business growth remains subdued. The operating margin, excluding other income, was reported at 81.25%, down from 91.69% in the previous quarter, suggesting rising operational costs or competitive pressures. The company's return on equity (ROE) stood at 6.72%, which is below the average expected for financial services companies, indicating challenges in generating sufficient returns on shareholder capital. Additionally, the high debt-to-equity ratio of 1.08 times reflects significant financial leverage, which could amplify risks in a rising interest rate environment. In terms of sales performance, net sales for the quarter ended December 2025 showed a growth of 7.84%, a decline from the previous quarter's 20.72%. The consolidated net profit growth also slowed to 1.63% compared to the previous quarter's substantial increase. Overall, while Starteck Finance Ltd has demonstrated impressive headline profit growth, the reliance on non-operating income and the structural weaknesses in operational metrics raise critical questions about the sustainability of its financial performance. The company has seen an adjustment in its evaluation, reflecting these underlying concerns.