Hindustan Adhesives Reports Strong Sales Growth Amid Debt Management Concerns

Hindustan Adhesives, a microcap player in the plastic products industry, has recently undergone an adjustment in evaluation. This revision reflects a complex interplay of financial metrics and market dynamics. The company reported a notable performance in the second quarter of FY24, with net sales reaching Rs 84.44 crore, marking a significant achievement. Additionally, profit before tax less other income for the quarter stood at Rs 6.32 crore, showcasing a growth rate of 51.5%.
Despite these positive indicators, the company's financial health raises concerns, particularly regarding its ability to manage debt. The Debt to EBITDA ratio is reported at 2.55 times, suggesting challenges in servicing obligations. Furthermore, the long-term growth trajectory appears subdued, with net sales growing at an annual rate of 12.78% over the past five years.

Technical indicators also reflect a bearish sentiment, with multiple factors contributing to this outlook. The stock has generated a return of -8.72% over the past year and has underperformed against the BSE 500 index in various time frames.

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