Shree Rama Newsprint Reports Strong Profits Amid High Debt Challenges

Shree Rama Newsprint, a microcap player in the Paper & Paper Products industry, has recently undergone an evaluation adjustment reflecting its current market dynamics. The company reported notable financial metrics for the third quarter of FY24-25, with a profit before tax (PBT) less other income reaching Rs 65.46 crore and a profit after tax (PAT) of Rs 66.73 crore, marking a significant performance for the period.
Despite these positive indicators, the company faces challenges with a high debt burden, as evidenced by a debt-equity ratio of 5.06 times and a debt to EBITDA ratio of 26.58 times, suggesting a constrained ability to service its obligations. Additionally, the return on equity (ROE) stands at a modest average of 1.70%, indicating limited profitability relative to shareholders' funds.

While the stock has outperformed the broader market with a return of 51.57% over the past year, it is important to note that profits have experienced a decline of 23%. The stock's valuation appears expensive, with a return on capital employed (ROCE) of 1 and an enterprise value to capital employed ratio of 1.7.

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