Graphite India's Q1 FY25 results show significant improvement, but concerns remain

Graphite India, a midcap company in the electrodes and welding industry, has recently declared its financial results for the quarter ending March 2024. The company has shown a very positive performance in this quarter, with a significant improvement in its financial score from -17 to 24 in the last three months.

One of the key factors contributing to this positive performance is the growth in Profit Before Tax (PBT) less Other Income, which has increased by 178.26% year on year. The company has also seen a significant growth in Profit After Tax (PAT), which has increased by 890.0% year on year. This trend is expected to continue in the near term.

Graphite India has also shown a strong operating cash flow, with the highest amount of Rs 680.26 crore generated in the last three years. The company’s operating profit (PBDIT) has also been consistently growing in the last five quarters, with the highest amount of Rs 113.00 crore in the current quarter. This has led to an improvement in the company’s operating profit margin, which is currently at its highest at 15.52%.

However, there are some areas of concern for Graphite India. The company’s non-operating income is 68.31% of its PBT, indicating a high reliance on non-business activities for income. Additionally, the company’s cash and cash equivalents have decreased to the lowest amount of Rs 70.00 crore in the last six half-yearly periods, indicating a deteriorating short-term liquidity.

Overall, Graphite India has shown a strong financial performance in the quarter ending March 2024. However, investors should keep an eye on the company’s reliance on non-business activities for income and its decreasing cash reserves. MarketsMOJO has given a ‘Sell’ call for the company’s stock based on its financial performance.