Royal India Corporation Reports Strong Sales Growth Amid High Debt Concerns

Royal India Corporation, operating in the Gems, Jewellery and Watches industry, has recently undergone an evaluation adjustment that reflects its current financial standing. The company has reported positive financial performance for the quarter Q1 FY25-26, with net sales for the latest six months reaching Rs 111.89 crore, showcasing a significant growth rate of 885.81%. Additionally, the profit after tax (PAT) for the same period stands at Rs 14.12 crore.
Despite these positive indicators, the company faces challenges, including a high debt burden, with a debt-to-equity ratio averaging 9.89 times. This has contributed to negative return on equity (ROE) and has raised concerns regarding its long-term fundamental strength. Over the past five years, net sales have grown at an annual rate of 4.79%, indicating limited long-term growth potential.

Furthermore, Royal India Corporation has underperformed the market, with a return of -85.03% over the last year, significantly surpassing the BSE500's negative return of -2.34%. The company has declared positive results for the last four consecutive quarters, yet its return on capital employed (ROCE) is at -0.5, suggesting challenges in generating returns relative to its capital.

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