Davangere Sugar Company's Q2 financial report shows negative performance and 'Strong Sell' call

Davangere Sugar Company, a microcap player in the sugar industry, recently announced its financial results for the quarter ending September 2024. The company's stock has been given a 'Strong Sell' call by MarketsMOJO.

According to the financial report, Davangere Sugar has seen a negative performance in the second quarter of the fiscal year 2024-2025. The company's score has fallen from -11 to -12 in the last three months.

One of the major factors contributing to this decline is the decrease in net sales. The company's net sales for the quarter were Rs 39.33 crore, which is a significant drop of 26.6% compared to the average net sales of the previous four quarters, which stood at Rs 53.59 crore. This indicates a very negative sales trend in the near term.

Another concerning aspect is the increase in interest costs. The company's interest expenses for the quarter were Rs 10.24 crore, which is a growth of 87.20% compared to the previous quarter. This rise in interest costs suggests that the company has taken on more borrowings.

Furthermore, the company's ability to manage its interest payments has deteriorated, with the operating profit to interest ratio being the lowest in the last five quarters at 1.43 times.

In terms of profitability, Davangere Sugar has also seen a decline. The profit after tax (PAT) for the nine-month period was Rs 6.78 crore, which is a decrease of 36.28% compared to the same period last year. The near term trend for PAT is also negative.

Overall, the financial results for the quarter ending September 2024 do not paint a positive picture for Davangere Sugar Company. Investors are advised to exercise caution and consider the 'Strong Sell' call given by MarketsMOJO.