Som Distilleries Shows Strong Sales Growth Amid Debt Servicing Concerns

Som Distilleries & Breweries has recently undergone an evaluation adjustment, reflecting a nuanced view of its financial standing within the breweries and distilleries sector. The company has demonstrated a notable annual growth rate in net sales of 25.44%, indicating a robust operational capacity. Additionally, it has reported positive results for the last 11 consecutive quarters, showcasing consistency in its performance metrics.
However, the evaluation adjustment highlights concerns regarding the company's ability to service its debt, as evidenced by a high Debt to EBITDA ratio of 11.51 times. This metric suggests challenges in managing financial obligations relative to earnings. Furthermore, the average Return on Equity stands at 8.44%, which points to a lower profitability per unit of shareholders' funds.

Despite these challenges, the company has achieved a significant operating cash flow of Rs 97.52 crore and a high return on capital employed (ROCE) of 20.71%. The stock is currently trading at a discount compared to its historical valuations, and promoter confidence appears to be rising, with an increase in their stake to 36.32%.

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