Hil Ltd's Q2 FY24-25 financials show mixed results, with concerns over rising debt and declining profits

Hil Ltd, a smallcap company in the construction material industry, has recently declared its financial results for the quarter ending September 2024. According to the report, the company has seen a negative financial performance in Q2 FY24-25, with the score remaining the same in the last three months.

However, there are some positive aspects to Hil Ltd's financials. The company has shown a strong operating cash flow of Rs 173.30 crore annually in the last three years, indicating higher cash revenues from business operations. Additionally, the earnings per share (EPS) for the quarter were at its highest in the last five quarters at Rs 19.38, showing an increase in profitability and higher earnings for shareholders. The dividend payout ratio (DPR) has also been consistently high at 81.59% in the last five years, indicating that the company is distributing a higher proportion of its profits as dividends.

On the other hand, there are some areas of concern for Hil Ltd. The interest cost has increased by 296.88% over the previous half-yearly period, indicating a rise in borrowings. The profit before tax less other income (PBT) for the quarter has fallen by -118.48% year on year (YoY), and the profit after tax (PAT) has also seen a decline of -126.8% YoY. The company's ability to manage interest payments has also deteriorated, with the operating profit to interest ratio being at its lowest in the last five quarters. The debtors turnover ratio has also slowed down, indicating a slower pace of settling debts.

Moreover, the operating profit (PBDIT) for the quarter has been at its lowest in the last five quarters, and the operating profit margin has also decreased to -5.30%. The debt-equity ratio has also been consistently high at 0.74 times in the last five half-yearly periods, indicating that the company is borrowing more to fund its operations, which may lead to a stressed liquidity situation. Lastly, the non-operating income has increased, but it may not be sustainable in the long run.

In conclusion, while Hil Ltd has shown some positive aspects in its financials, there are also some areas of concern that investors should consider before making any investment decisions. MarketsMOJO has given a 'Strong Sell' call for the company's stock, and it is advisable for investors to do their own research and analysis before making any investment in Hil Ltd.