Kerala Ayurveda Faces Financial Challenges Amidst Declining Profitability and High Debt Burden

Kerala Ayurveda, a microcap player in the Pharmaceuticals & Drugs industry, has recently undergone an evaluation adjustment reflecting its current financial standing. The company reported flat financial performance for the quarter ending December 2024, with a notable operating loss. Over the past five years, its operating profit has shown a decline, averaging an annual rate of -3.45%.
The company's financial metrics indicate a high debt burden, with a debt-to-equity ratio averaging 10.88 times, which raises concerns about its long-term fundamental strength. Additionally, the return on capital employed stands at a modest 5.75%, suggesting limited profitability relative to the total capital utilized.

In the latest quarter, Kerala Ayurveda's profit after tax was recorded at Rs -2.89 crore, reflecting a significant decline compared to previous averages. The operating profit to interest ratio reached its lowest point at -2.77 times, further emphasizing the challenges faced by the company.

Despite these hurdles, the stock has generated a return of 21.23% over the past year, outperforming the BSE 500 in each of the last three annual periods.

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