Emami Paper Mills Reports Negative Performance in Q3, Concerns Over Profitability and Debt Management

Emami Paper Mills, a microcap company in the paper and paper products industry, recently announced its financial results for the quarter ending September 2024. According to the report released on November 7, 2024, the company has seen a negative performance in the quarter, with a score of -7 compared to 5 in the previous three months. Despite this, there are some positive aspects to the company's financials. Emami Paper has recorded the highest annual operating cash flow of Rs 351.34 crore in the last three years, indicating a strong revenue generation from its business operations. However, there are also some areas of concern for the company. The quarterly profit before tax (PBT) less other income has fallen by 69.2% to Rs 9.56 crore, compared to the average PBT of the previous four quarters at Rs 31.08 crore. The same trend can be seen in the quarterly profit after tax (PAT), which has fallen by 68.3% to Rs 7.59 crore, compared to the average PAT of the previous four quarters at Rs 23.94 crore. The company's ability to manage interest payments has also deteriorated, with the operating profit to interest ratio at its lowest in the last five quarters. Additionally, the debtors turnover ratio has also decreased each half year in the last five periods, indicating a slower pace in settling debts. The operating profit (PBDIT) for the quarter is also at its lowest in the last five quarters, and the operating profit margin has decreased to 7.53%. The declining profitability has also resulted in a lower earnings per share (EPS) of Rs 1.25 in the last five quarters. Based on these financials, MarketsMOJO has given a 'Sell' call for Emami Paper's stock. Investors should carefully consider these factors before making any investment decisions.