Lotus Chocolate Company Reports Strong Growth Amid High Debt Concerns

Lotus Chocolate Company, a small-cap player in the FMCG sector, has recently undergone an adjustment in evaluation, reflecting its financial performance and market position. The company reported very positive results for the second quarter of FY24-25, showcasing a significant annual growth rate in net sales of 52.33% and an impressive operating profit increase of 96.68%.
In the latest quarter, net sales reached Rs 128.29 crore, marking a growth of 96.9%. Additionally, profit before tax (PBT) less other income stood at Rs 6.85 crore, with a notable growth of 206.5%, while profit after tax (PAT) was reported at Rs 5.24 crore, reflecting a remarkable growth of 226.0%.

Despite these strong financial indicators, the company operates with a high debt-to-equity ratio of 5.65 times, which may raise concerns regarding its financial leverage. The return on capital employed averages 9.82%, indicating low profitability relative to total capital. Furthermore, the stock has generated a return of 166.80% over the past year, significantly outperforming the broader market, which returned 7.71%.

The technical trend remains sideways, suggesting a lack of clear price momentum.

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