Significant growth in revenue but a loss-making company

• Despite the company's remarkable 6-fold increase in revenue over the past three years, it has regrettably failed to achieve profitability during any of these fiscal periods. This performance stands in stark contrast to its publicly listed counterparts, which not only report profits but also demonstrate robust profit margins. Additionally, the company's cash flow from operations has faced adversity, as it reported a negative cash flow of Rs 261 crore in FY23.
• Furthermore, the company bears a substantial burden of debt on its financial records. As of March 2023, its total borrowings amounted to Rs 1710 crore. Alarmingly, the company's net debt position has deteriorated over the past two years, escalating from Rs 557 crore in FY21 to a staggering Rs 1094 crore in FY23. This significant debt load has cast a shadow on its income statement, with finance costs accounting for an exorbitant 50% of its fiscal revenue. It is improbable that the company's financial situation will witness rapid improvement given the daunting magnitude of its debt.

Valuation

• The company has been making losses for the last 4 years as compared to its peers who are in profit and hence, we would advise avoiding this IPO.