West Coast Paper Mills' Q4 Results Show Significant Decline in Profitability and Non-Operating Income

West Coast Paper Mills, a smallcap company in the paper and paper products industry, recently declared its financial results for the quarter ending March 2024. However, the company's performance has been deemed as very negative by MarketsMOJO, who have given a 'Sell' call for its stock.

According to the financials, West Coast Paper's profit before tax (PBT) has fallen by 61.7% to Rs 115.06 crore, compared to the average PBT of the previous four quarters which was Rs 300.51 crore. This trend is expected to continue in the near term. Similarly, the profit after tax (PAT) has also fallen by 44.4% to Rs 119.79 crore, compared to the average PAT of the previous four quarters which was Rs 215.39 crore.

The company's operating profit (PBDIT) has also been on a downward trend, with the latest quarter recording the lowest at Rs 169.63 crore. The operating profit margin has also decreased to 15.85%, indicating a decline in the company's efficiency. The net sales for the quarter have also fallen by 9.6% to Rs 1,070.10 crore, compared to the average net sales of the previous four quarters which was Rs 1,183.77 crore.

One concerning aspect highlighted by the financials is the high non-operating income, which accounts for 33.71% of the PBT. This suggests that the company's income from non-business activities is high, which may not be a sustainable business model. Additionally, the earnings per share (EPS) for the quarter have also decreased to the lowest at Rs 18.14 in the last five quarters, indicating declining profitability and lower earnings for shareholders.

It is also worth noting that the non-operating income for the quarter was the highest at Rs 58.52 crore in the last five quarters. This may not be a sustainable trend and could potentially impact the company's financial performance in the future.

Overall, the financial results for the quarter ending March 2024 have been deemed as very negative for West Coast Paper Mills. Investors are advised to exercise caution and consider the company's declining profitability and unsustainable non-operating income before making any investment decisions.