Are Tirupati Forge Ltd latest results good or bad?

Tirupati Forge Ltd's latest financial results for Q3 FY26 reflect a notable increase in revenue, achieving ₹48.60 crores, which represents a significant 85.92% growth year-on-year and marks the highest quarterly sales in the company's history. This growth trajectory underscores strong demand for its forged components across various sectors, including automotive and industrial applications. The company has now recorded seven consecutive quarters of revenue growth, indicating robust market traction. However, the profitability aspect presents challenges. The operating margin, excluding other income, has contracted to 10.47%, down from 16.14% a year earlier. Similarly, the net profit margin has declined to 4.16% from 8.95% in the same quarter last year. Despite an absolute net profit increase of 54.20% year-on-year, the margin compression raises concerns about operational efficiency, particularly amid rising input costs and aggressive expansion efforts. The company's operational costs have also escalated, with employee expenses and interest costs significantly higher compared to the previous year. This increase in costs, coupled with the decline in margins, suggests that while revenue growth is strong, it may not be translating effectively into profitability. In terms of financial metrics, Tirupati Forge's return on capital employed (ROCE) has decreased to 5.75%, indicating that the capital deployed is yielding lower returns compared to historical averages. The balance sheet has expanded, with a notable increase in shareholder funds and fixed assets, reflecting the company's ongoing capital expenditure initiatives. Overall, while Tirupati Forge Ltd has demonstrated impressive revenue growth, the accompanying margin erosion and operational challenges highlight the need for management to focus on restoring profitability and improving capital efficiency. The company has seen an adjustment in its evaluation, reflecting these mixed operational trends.