Gulshan Polyols Reports Strong Q4 Performance Amid Debt Servicing Challenges

Gulshan Polyols, a small-cap player in the chemicals industry, has recently undergone an adjustment in evaluation, reflecting a complex financial landscape. The company reported positive financial performance for the quarter ending December 2024, with notable figures such as a profit before tax (PBT) of Rs 8.33 crore, marking a growth of 41.8%. Additionally, net sales reached a record high of Rs 609.76 crore, and the profit before depreciation, interest, and tax (PBDIT) also peaked at Rs 26.73 crore.
However, the company faces challenges, particularly in its ability to service debt, as indicated by a high Debt to EBITDA ratio of 6.06 times. Long-term growth appears limited, with operating profit growing at an annual rate of 3.42% over the past five years. The return on equity (ROE) averages 3.67%, suggesting low profitability relative to shareholders' funds.

Despite these dynamics, domestic mutual funds hold no stake in Gulshan Polyols, which may reflect caution regarding the company's valuation or business prospects. The stock has consistently underperformed against benchmarks over the last three years, generating a return of -8.01% in the past year.

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