Why Did Nelco’s Q1 Net Profit Plummet Over 60%?
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Synopsis
In a shocking financial report, Nelco Limited, part of the Tata Group, has revealed a dramatic drop in its Q1 net profit by over 60%. As expenses rise, investors are left wondering about the future of this communication giant. What does this mean for the company's market position?
Key Takeaways
- Nelco's net profit fell by 60.52% in Q1 FY26.
- Total expenses increased by 8.56% to Rs 67.05 crore.
- EBITDA declined by 36% YoY.
- Operating margin contracted to 10.4%.
- Revenue from operations slightly rose to Rs 74.79 crore.
Mumbai, July 14 (NationPress) Tata Group-backed Nelco Limited has reported a staggering decline in its consolidated net profit year-on-year (YoY) for the first quarter (Q1) of FY26. The company's profits have plummeted by 60.52%, amounting to Rs 1.80 crore, a decrease from Rs 4.56 crore in the same quarter last year (Q1 FY25).
Profit before tax (PBT) also faced a significant drop, declining by 60.70% to Rs 2.40 crore during this quarter, as noted in its stock exchange filing.
Total expenses surged by 8.56% to Rs 67.05 crore, up from Rs 61.76 crore a year prior, primarily driven by a 15.67% increase in stock-in-trade purchases, which reached Rs 6.42 crore.
Operating performance showed signs of strain as well, with EBITDA (earnings before interest, taxes, depreciation, and amortisation) decreasing by 36% YoY to Rs 7.8 crore from Rs 12.2 crore in Q1 FY25.
This has led to a sharp contraction in the company's operating margin, which fell to 10.4% from 16.5%% in the same quarter last year.
Despite these challenges, the company's revenue from operations saw a slight uptick, rising to Rs 74.79 crore compared to Rs 74.08 crore the previous year.
Furthermore, total income increased marginally by 1.57% YoY to Rs 75.36 crore in Q1 FY26.
After the earnings report, Nelco's shares dropped 5.28% or Rs 50 to close at Rs 897 on the National Stock Exchange (NSE).
The stock has experienced a decline of over 20% in the last month and is down more than 40% from its recent peak of Rs 1,502.
Established in 1940 and a part of Tata Power, Nelco specializes in satellite-based communication services.
The company provides VSAT connectivity, Satcom project implementation, and integrated security and surveillance solutions for both enterprise and government clients.
Nelco holds essential licenses, including VSAT, ISP, and IFMC, catering to various sectors such as banking, oil and gas, education, and renewable energy.
Point of View
My perspective on Nelco's current financial challenges reflects a broader concern for the communication sector's stability. With significant profit declines and rising expenses, it's crucial for stakeholders to evaluate the company's strategic direction moving forward. The industry is evolving, and Nelco's ability to adapt will determine its future success.
NationPress
14/07/2025
Frequently Asked Questions
What caused Nelco's profit decline?
Nelco's profit decline was primarily driven by increased expenses, particularly a significant rise in stock purchases and operational pressures.
How has Nelco's share price reacted?
Following the earnings announcement, Nelco's shares closed down 5.28% and have seen a decline of over 20% in the past month.
What services does Nelco provide?
Nelco specializes in satellite-based communication services, offering VSAT connectivity, Satcom project implementation, and security solutions.
How does Nelco's performance compare to last year?
In Q1 FY26, Nelco's net profit dropped by 60.52% compared to Rs 4.56 crore in Q1 FY25.
What sectors does Nelco serve?
Nelco caters to various sectors, including banking, oil and gas, education, and renewable energy.
