Are Subex Ltd latest results good or bad?

Subex Ltd's latest financial results present a complex picture of its operational performance. In Q2 FY26, the company reported a net profit of ₹2.86 crores, which reflects a significant year-on-year growth of 361.29%. However, this figure is notably down 77.67% from the previous quarter's profit of ₹12.81 crores, indicating a substantial decline in profitability on a sequential basis. Revenue for the same quarter was ₹68.91 crores, representing a year-on-year decrease of 7.08%, continuing a trend of revenue contraction that has persisted over several years. On a quarter-on-quarter basis, revenue showed a modest increase of 3.78%. The operating margin improved to 9.11% from 2.55% in the previous year, driven by a reduction in employee costs. This margin expansion, while positive, raises concerns about the company's ability to invest in growth and innovation, given the ongoing revenue challenges. Additionally, the average return on equity (ROE) remains low at 1.65%, highlighting issues with capital efficiency and the company's ability to generate adequate returns for shareholders. Subex's balance sheet is a relative strength, with no long-term debt and a net cash position, providing some liquidity to navigate operational difficulties. However, the company has faced significant underperformance in the market, with its stock declining 40.12% over the past year, underperforming both its sector and the broader market indices. Overall, the results indicate that Subex Ltd is grappling with persistent operational challenges, including declining revenues and weak capital efficiency, despite some improvements in margins. The company has seen an adjustment in its evaluation, reflecting the complexities of its financial situation and the need for strategic interventions to address its ongoing difficulties.