Sangal Papers Reports Record Q2 Sales Amid Debt and Pledged Shares Concerns

Sangal Papers, a microcap company in the Paper & Paper Products industry, has recently undergone an evaluation adjustment reflecting changes in its underlying financial metrics and market position. The company reported its highest net sales of Rs 51.19 crore in the second quarter of FY24-25, alongside a PBDIT of Rs 3.33 crore. This performance highlights a notable operational capacity.
The return on capital employed (ROCE) for the half-year stands at 11.89%, suggesting a level of operational efficiency that may be appealing to investors. However, the company faces challenges regarding its long-term fundamental strength, as indicated by an average ROCE of 6.63% over the past five years.

Sangal Papers has experienced a net sales growth rate of 6.35% annually, while its operating profit has seen a more significant increase of 23.45%. Nonetheless, the company’s high debt-to-EBITDA ratio of 4.37 times raises concerns about its debt servicing capabilities. Additionally, the fact that 38.76% of promoter shares are pledged could create downward pressure on stock prices, particularly in volatile market conditions.

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