Ashnoor Textile Mills Reports Strong Growth Amid Debt Concerns and Valuation Adjustments

Ashnoor Textile Mills, a microcap player in the textile industry, has recently undergone an adjustment in its evaluation. The company reported very positive financial performance for the third quarter of FY24-25, showcasing a growth in net sales of 7.46% and a notable increase in profits before tax, which rose by 119.4% compared to the previous four-quarter average. Additionally, the company has consistently declared positive results over the last three consecutive quarters, with net sales for the half-year reaching Rs 87.62 crore, reflecting a growth of 41.69%.
Despite these encouraging figures, the evaluation adjustment highlights concerns regarding the company's long-term fundamental strength, particularly its ability to service debt, as indicated by a high debt-to-EBITDA ratio of 3.35 times. The return on capital employed (ROCE) stands at 11.1, suggesting an attractive valuation relative to its enterprise value to capital employed. Furthermore, while the stock has generated a return of 29.03% over the past year, its profits have surged by 107.1%, indicating a complex financial landscape.

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