Sitara Energy Limited has reported a mixed financial performance for the first quarter ended September 30, 2026, with its standalone operations recording a small net loss while its consolidated financial results showed a significant improvement in profitability.

According to the company’s unaudited quarterly report, standalone net sales increased to Rs. 15.61 million during July–September 2026, compared with Rs. 7.97 million in the corresponding period last year. This represents an increase of approximately 96%, reflecting higher solar installations and extensive repair and maintenance activities.

The improvement in revenue also helped the company turn its gross loss into a gross profit. Sitara Energy recorded a gross profit of Rs. 4.33 million, compared with a gross loss of Rs. 2.25 million in the same quarter of the previous financial year.

However, despite the improvement in its operating performance, the company posted a standalone net loss of Rs. 0.97 million, against a net profit of Rs. 1.86 million in the corresponding quarter of 2025. Loss per share stood at Rs. 0.05, compared with earnings per share of Rs. 0.10 last year.

Lower Finance Costs Provide Some Relief

One of the positive developments during the quarter was a significant reduction in finance costs. Sitara Energy’s finance expenses declined to Rs. 5.56 million from Rs. 10.74 million in the corresponding period last year.

The reduction followed the disposal of certain investment properties to repay rescheduled credit facilities. Management also highlighted its efforts to maintain strict control over operating expenses and improve the company’s financial position.

These measures demonstrate the company’s focus on reducing its financial burden while working towards sustainable operations.

Consolidated Results Show Significant Improvement

The company’s consolidated financial performance, including its subsidiary, presented a much stronger picture. Consolidated net sales surged to Rs. 86.38 million during the first quarter, compared with Rs. 16.19 million in the same period last year.

The group achieved a gross profit of Rs. 28.66 million, reversing a gross loss of Rs. 0.13 million recorded in the corresponding quarter of 2025.

More importantly, consolidated net profit increased to Rs. 23.23 million from Rs. 3.64 million a year earlier. Consolidated earnings per share also improved substantially to Rs. 1.22 from Rs. 0.19.

The difference between standalone and consolidated results highlights the contribution of the subsidiary to the group’s overall financial performance.

Solar Energy Remains a Key Part of Future Strategy

Sitara Energy’s management is focusing on expanding solar power generation to improve operational efficiency and offer electricity at competitive rates to bulk power consumers.

The company believes that increasing solar generation could help improve revenue and profitability. Management is also hopeful that better utilization of existing production capacity will support higher electricity generation and sales in the coming periods.

However, fuel prices remain a major challenge, as the company has indicated that conventional electricity generation costs are not sufficiently competitive with distribution companies (DISCOs).

Debt Reduction and Financial Restructuring

Another important part of the company’s recovery strategy involves financial restructuring. Sitara Energy has entered into settlement and restructuring agreements with its lenders, converting short-term financing into long-term facilities and obtaining relief on accrued markup.

The company is also disposing of non-core assets, including investment properties, to repay or prepay outstanding credit facilities and support further investment in solar generation.

During the quarter, the parent company reported the sale of investment properties for Rs. 32.02 million, against which Rs. 10.43 million had been received.

Despite these initiatives, the company’s financial statements highlight material uncertainty regarding its ability to continue as a going concern. Management, however, remains confident that the planned measures will help restore sustainable operations.

Outlook

Sitara Energy Limited’s first-quarter performance reflects two different aspects of its business. While standalone operations continue to face profitability challenges, consolidated results demonstrate a considerable improvement compared with the previous year.

Lower finance costs, higher sales, solar expansion plans and financial restructuring are important elements of the company’s recovery strategy. Going forward, the successful implementation of these measures, along with competitive electricity generation costs and a supportive regulatory environment, will be essential to maintaining growth.

Investors will be watching how effectively the company converts its improved consolidated profitability into sustainable operating performance and stronger cash flows in the coming quarters.