Centrum Capital's Q2 FY24-25 shows flat performance, concerns over PBT and debt ratio

Centrum Capital, a smallcap finance company, has recently declared its financial results for the quarter ending September 2024. According to the latest report, the company has seen a flat performance in Q2 FY24-25, with a score of 3 out of 10, which is an improvement from 0 in the last 3 months.

The company's net sales for the quarter were at its highest at Rs 783.63 crore, showing a growth trend in each of the last five quarters. This indicates a positive near-term sales trend for Centrum Capital. The net sales for the quarter have also grown by 26.4% over the average net sales of the previous four quarters, which were at Rs 619.84 crore.

However, the company's profit before tax (PBT) less other income for the quarter was at Rs -68.97 crore, showing a decline of -38.5% over the average PBT of the previous four quarters. This indicates a very negative near-term trend for PBT. Additionally, the company's debt-equity ratio for the half-yearly period is at its highest at 39.36 times, showing a continuous increase in borrowing to fund its operations. This may lead to a stressed liquidity situation for the company.

Another concerning factor for Centrum Capital is its non-operating income, which is 556.45% of its PBT for the quarter. This indicates a high income from non-business activities, which may not be a sustainable business model. The company's non-operating income for the quarter was also at its highest in the last five quarters at Rs 84.08 crore, which may not be sustainable in the long run.

In conclusion, while Centrum Capital has shown a positive trend in its net sales, its declining PBT and increasing debt-equity ratio raise concerns about its financial stability. Investors should take note of these factors before making any investment decisions. MarketsMOJO has given a 'Strong Sell' call for the company's stock based on its financial performance.