How has been the historical performance of Bafna Pharma.?

Revenue and Operating Performance Trends

Bafna Pharma’s net sales have seen a significant contraction over the past seven years. From a peak exceeding ₹185 crores in the fiscal year ending March 2014, sales declined steadily to ₹43.36 crores by March 2019. This downward trend reflects a substantial reduction in the company’s core operating income, which also fell from ₹185.34 crores in 2014 to ₹43.36 crores in 2019. The company’s other operating income was negligible in recent years, except for a notable ₹41.11 crores in 2015, which temporarily bolstered total operating income.

Cost management has been a persistent issue. Raw material costs and purchase of finished goods have fluctuated but remained substantial relative to sales, contributing to negative operating margins in recent years. The operating profit before depreciation and interest (PBDIT) excluding other income swung from positive territory in earlier years to significant losses, with a margin of -30.78% in 2019. Despite some other income, the company reported operating losses consistently from 2017 onwards.

Profitability and Earnings

Profit before tax and net profit figures reveal a similar pattern of decline. After posting modest profits in 2015 and 2014, Bafna Pharma has recorded losses every year since 2016, with the net loss widening to nearly ₹19 crores in 2017 and remaining in double-digit negative territory through 2019. Earnings per share (EPS) have mirrored this trend, turning negative from 2016 onwards, reaching a low of -7.98 in 2019. The company’s profit after tax margin deteriorated sharply, reflecting operational challenges and high interest expenses.

Balance Sheet and Financial Position

The company’s balance sheet has reflected the operational difficulties. Shareholders’ funds declined from ₹71.78 crores in 2015 to ₹19.06 crores in 2019, indicating erosion of net worth. Total liabilities also decreased but remained high relative to assets, with total debt reducing from over ₹68 crores in 2015 to ₹46.23 crores in 2019. The net block of fixed assets declined moderately, signalling limited capital expenditure or asset sales.

Current assets have contracted significantly, with inventories and sundry debtors falling sharply, which may indicate reduced operational scale or tighter working capital management. The company’s net current assets were negative in 2018 and 2019, pointing to liquidity pressures. Book value per share adjusted for liabilities dropped from ₹38.47 in 2015 to ₹8.06 in 2019, underscoring the financial strain.

Cash Flow Analysis

Cash flow from operating activities has been negative in recent years, with a notable outflow of ₹34 crores in 2020. Investing activities showed some inflows, possibly from asset disposals or reduced capital expenditure, while financing activities fluctuated, reflecting debt repayments and borrowings. The company’s closing cash and cash equivalents improved to ₹8 crores in 2020 from ₹2 crores in 2019, suggesting some recovery in liquidity.

Summary of Historical Performance

Overall, Bafna Pharma’s historical performance depicts a company grappling with declining sales, sustained losses, and balance sheet deterioration over the past several years. While the company showed profitability in 2014 and 2015, subsequent years have been marked by negative operating margins and net losses. The erosion of shareholders’ funds and negative cash flows from operations highlight ongoing financial challenges. However, recent improvements in liquidity and cash reserves may provide a foundation for potential recovery if operational efficiencies and revenue growth can be restored.

Investors should carefully weigh these historical trends against current market conditions and company initiatives before considering exposure to Bafna Pharma.

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