Gayatri Projects Ltd Reports Positive Financial Trend Amid Mixed Operational Metrics

Quarterly Financial Performance: Revenue and Profitability

In the December 2025 quarter, Gayatri Projects Ltd achieved its highest-ever net sales of ₹505.84 crores, reflecting robust top-line growth compared to previous quarters. This surge in revenue was accompanied by a remarkable increase in profit after tax (PAT), which soared to ₹49.74 crores, representing a staggering growth of 2625.0% over the prior comparable period. The earnings per share (EPS) also reached a record high of ₹115.23, underscoring the company's improved profitability on a per-share basis.

However, the operating profitability metrics present a more nuanced picture. The company reported a negative PBDIT (profit before depreciation, interest and tax) of ₹-28.84 crores and a PBT (profit before tax) less other income of ₹-39.21 crores, indicating operational losses before factoring in non-operating income. Notably, non-operating income accounted for 178.05% of the profit before tax, suggesting that a significant portion of the reported profits stemmed from non-core activities rather than core construction operations.

Return on Capital Employed and Efficiency Ratios

Gayatri Projects posted its highest half-yearly return on capital employed (ROCE) at 7.95%, signalling improved capital utilisation compared to prior periods. This metric is critical for investors assessing the efficiency with which the company is deploying its capital to generate profits.

Conversely, the company’s inventory turnover ratio and debtors turnover ratio for the half-year were at their lowest levels, 2.33 times and 0.45 times respectively. These declines indicate slower movement of inventory and delayed collection of receivables, which could strain working capital management and cash flows. Supporting this concern, cash and cash equivalents were also at a low ₹12.50 crores for the half-year, potentially limiting liquidity buffers.

Stock Price and Market Performance

Gayatri Projects’ stock price remained steady at ₹12.87, matching its 52-week high and closing price on the latest trading day. The stock has delivered strong returns over the past year and three years, with gains of 86.52% and 90.10% respectively, significantly outperforming the Sensex returns of 8.98% and 34.96% over the same periods. Year-to-date, the stock has appreciated by 10.19%, while the Sensex declined by 2.89%. However, the longer-term five- and ten-year returns have been negative for the stock, at -69.17% and -87.86%, contrasting sharply with the Sensex’s robust gains over those horizons.

Financial Trend Shift and Mojo Score Analysis

The company’s financial trend score has improved significantly from -18 to 19 over the last three months, reflecting a shift from very positive to positive financial performance. This improvement is corroborated by the surge in PAT and EPS, as well as the record net sales. Despite this, the overall Mojo Score remains modest at 44.0, with a Mojo Grade of Sell, upgraded from a previous Strong Sell on 09 February 2026. The Market Cap Grade stands at 4, indicating a relatively low market capitalisation compared to peers.

This grading suggests that while recent quarterly results show promise, underlying operational challenges and liquidity concerns temper the investment appeal. Investors should weigh the improved profitability against the weak turnover ratios and negative operating earnings before making allocation decisions.

Operational Challenges and Working Capital Concerns

Gayatri Projects’ inventory turnover ratio of 2.33 times and debtors turnover ratio of 0.45 times are the lowest recorded in recent periods, signalling potential inefficiencies in inventory management and receivables collection. Such sluggishness can lead to stretched working capital cycles, increasing the risk of cash flow constraints. The low cash and cash equivalents balance of ₹12.50 crores further accentuates liquidity risks, especially in a capital-intensive sector like construction.

These operational headwinds are reflected in the negative PBDIT and PBT less other income figures, highlighting that core business profitability remains under pressure despite the strong bottom-line PAT growth driven by non-operating income.

Comparative Market Returns and Long-Term Outlook

While the stock has outperformed the Sensex substantially over the short to medium term, the long-term returns over five and ten years remain deeply negative. This divergence suggests that the company has faced significant challenges historically but may be entering a phase of recovery as indicated by recent quarterly results.

Investors should consider this mixed performance backdrop carefully. The recent positive financial trend and record quarterly metrics offer hope for a turnaround, but persistent operational inefficiencies and liquidity constraints warrant caution.

Investor Takeaway and Strategic Considerations

Gayatri Projects Ltd’s recent quarterly results mark a significant improvement in financial performance, with record revenue and EPS growth signalling a potential inflection point. The positive shift in the financial trend score and upgrade in Mojo Grade from Strong Sell to Sell reflect this progress.

Nonetheless, the company’s operational challenges, including low inventory and debtor turnover ratios and negative core operating earnings, highlight ongoing risks. The reliance on non-operating income to bolster profits raises questions about the sustainability of earnings growth.

Investors should monitor upcoming quarters closely for signs of sustained operational improvement and better working capital management. Given the stock’s strong recent returns relative to the Sensex, there is potential upside, but the long-term negative return history and liquidity concerns counsel prudence.

In summary, Gayatri Projects Ltd presents a cautiously optimistic investment case, with recent financial metrics encouraging but offset by structural operational issues that require resolution to ensure durable growth and profitability.

Unlock special upgrade rates for a limited period. Start Saving Now →