Paras Defence Reports Positive Q1 Results, But Some Areas Need Improvement

Paras Defence and Space Technologies, a midcap company in the defence industry, has recently declared its financial results for the quarter ending June 2024. The stock call for the company by MarketsMOJO is 'Hold'.

According to the financials, Paras Defence has shown a positive performance in the quarter, with a score improvement from -21 to 10 in the last 3 months. The company's Profit Before Tax less Other Income (PBT) has grown by 135.0% to Rs 18.92 crore, compared to the average PBT of the previous four quarters at Rs 8.05 crore. The Profit After Tax (PAT) has also seen a growth of 85.3% to Rs 14.85 crore, compared to the average PAT of the previous four quarters at Rs 8.02 crore. The company's Net Sales have also shown a positive trend, with a growth of 31.9% to Rs 83.57 crore, compared to the average Net Sales of the previous four quarters at Rs 63.38 crore.

The company's operating profit (PBDIT) has been the highest at Rs 24.12 crore in the last five quarters, and the operating profit margin has also seen an improvement, reaching the highest at 28.86%. This signifies an increase in the company's efficiency. The earnings per share (EPS) have also been the highest at Rs 3.81 in the last five quarters, indicating an increase in profitability and higher earnings for shareholders.

However, there are some areas that need improvement for Paras Defence. The interest cost has risen by 53.44% in the last half-yearly period, indicating increased borrowings. The inventory turnover ratio has also fallen to the lowest at 1.69 times, showing a slowdown in the company's pace of selling inventory. The company's short-term liquidity has also deteriorated, with cash and cash equivalents at the lowest at Rs 11.41 crore in the last six half-yearly periods. The debt-equity ratio has also reached the highest at 0.15 times in the last five half-yearly periods, indicating increased borrowing to fund operations and a potential strain on liquidity. The debtors turnover ratio has also fallen to the lowest at 1.28 times in the last five half-yearly periods, showing a slowdown in the company's pace of settling its debtors.

Overall, Paras Defence has shown a positive financial performance in the quarter ending June 2024, with improvements in key areas such as PBT, PAT, and net sales. However, there are some areas that need attention, such as interest cost, inventory turnover, and liquidity. Investors are advised to hold their stock in the company for now, as per MarketsMOJO's recommendation.