Expleo Solutions Reports Strong Q2 Results, But Debt to Equity Ratio Raises Concerns

Debt to Equity Ratio - Quarterly: Highest at 0.01 in the last five quarters.Company has low debt to equity ratio which indicates lower risk but also lower returns for shareholders.

Expleo Solutions, a smallcap IT software company, has recently announced its financial results for the quarter ending September 2024. The company has shown positive performance in the second quarter of the fiscal year 2024-25, with a score of 13 compared to -2 in the previous quarter.

According to the financials, the company's Profit After Tax (PAT) for the quarter has grown by 50.8% to Rs 35.49 crore, compared to the average PAT of the previous four quarters which was Rs 23.54 crore. This indicates a very positive trend in the near term. The company has also generated the highest Operating Cash Flow of Rs 69.21 crore in the last three years, showing a strong cash flow from its business operations.

Expleo Solutions has also seen a positive trend in its Net Sales, with the highest sales of Rs 259.26 crore in the last five quarters. The Operating Profit (PBDIT) for the quarter was also at its highest at Rs 42.28 crore, indicating a positive trend in the near term. The company's efficiency has also improved, with the highest Operating Profit Margin of 16.31% in the last five quarters.

The Profit Before Tax less Other Income (PBT) for the quarter was at its highest at Rs 31.79 crore, while the Earnings per Share (EPS) was also at its highest at Rs 22.87 in the last five quarters. This shows an increasing profitability and higher earnings for shareholders. The company also has a strong short-term liquidity, with the highest Cash and Cash Equivalents of Rs 276.19 crore in the last six half yearly periods.

However, there are some areas that need improvement for Expleo Solutions. The Non Operating Income for the quarter was at its highest at Rs 12.68 crore, which may not be sustainable as it comes from non-business activities. The Debt to Equity Ratio for the quarter was also at its highest at 0.01, indicating lower risk but also lower returns for shareholders.

In conclusion, Expleo Solutions has shown a positive financial performance in the second quarter of FY24-25, with strong growth in key areas. However, there are some areas that need to be monitored for sustainable growth in the future. Based on these financials, MarketsMOJO has given a 'Sell' call for the company's stock.