Hisar Metal Industries Faces Financial Struggles Amid Declining Performance Metrics

Hisar Metal Industries, a microcap player in the Steel/Sponge Iron/Pig Iron industry, has recently undergone an evaluation adjustment reflecting its current market position. The company has faced notable challenges, particularly in its financial performance during the third quarter of FY24-25. Key metrics indicate a high Debt to EBITDA ratio of 3.70 times, suggesting difficulties in servicing debt obligations. Additionally, the operating profit has shown a decline at an annual rate of -2.50% over the past five years, raising concerns about long-term growth prospects.
The company has reported negative results for eight consecutive quarters, with a profit after tax of Rs 1.94 crore reflecting a significant decline of -46.56%. Furthermore, the return on capital employed (ROCE) stands at a low 9.84%, and the debtors turnover ratio is also at its lowest, recorded at 4.23 times.

Despite these challenges, Hisar Metal Industries is trading at a discount compared to its peers' average historical valuations, with an enterprise value to capital employed ratio of 1.2. The stock has underperformed the market over the past year, with a return of -21.11%, significantly higher than the broader market's decline.

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