How has been the historical performance of Cool Caps?

Revenue and Profitability Trends

Cool Caps’ net sales have surged impressively, rising from ₹31.13 crores in March 2021 to ₹238.49 crores by March 2025. This nearly eightfold increase underscores the company’s expanding market presence and operational scale. Total operating income mirrored this growth, reflecting the absence of other operating income across the period.

Despite robust top-line growth, operating profit margins have experienced a notable decline. The operating profit margin excluding other income dropped from a healthy 23.0% in March 2021 to a modest 0.7% in March 2025. This contraction suggests rising costs or pricing pressures impacting core profitability. However, other income contributed significantly in recent years, particularly in March 2025, boosting the overall operating profit (PBDIT) to ₹35.04 crores from ₹7.33 crores in March 2021.

Profit before tax (PBT) followed an upward trend, increasing from ₹5.41 crores in March 2021 to ₹15.91 crores in March 2025. Correspondingly, profit after tax (PAT) rose from ₹4.57 crores to ₹11.97 crores over the same period, despite some fluctuations. The PAT margin, however, declined from 14.68% in March 2021 to 5.02% in March 2025, reflecting the impact of higher expenses and interest costs.

Cost Structure and Expense Analysis

The company’s expenditure profile reveals rising raw material costs, which escalated from ₹9.90 crores in March 2021 to ₹131.68 crores in March 2025. Similarly, purchases of finished goods increased substantially, indicating either higher volumes or cost inflation. Employee costs also rose steadily, reflecting workforce expansion or wage inflation.

Other expenses have more than doubled from ₹3.33 crores in March 2021 to ₹27.76 crores in March 2025, contributing to margin pressures. Interest expenses have increased markedly, from ₹1.87 crores to ₹11.84 crores, signalling higher debt servicing costs as the company expanded its borrowings.

Balance Sheet and Financial Position

Cool Caps’ balance sheet has strengthened considerably, with total assets growing from ₹50.04 crores in March 2021 to ₹251.17 crores in March 2025. Shareholders’ funds more than tripled, reaching ₹54.82 crores, supported by rising reserves. The company’s gross block of fixed assets expanded significantly, indicating ongoing capital investments to support growth.

However, liabilities have also increased, with total non-current liabilities rising from ₹17.78 crores to ₹85.62 crores, and current liabilities from ₹15.81 crores to ₹110.73 crores. This reflects a higher reliance on both long-term and short-term borrowings, which grew substantially over the period. The company’s net block and capital work in progress figures confirm active asset creation and expansion efforts.

Cash Flow and Liquidity

Operating cash flow has been positive in recent years, though modest, with ₹5 crores generated in March 2025. Investing activities consistently showed cash outflows, reflecting ongoing capital expenditure. Financing activities provided significant inflows, supporting the company’s expansion and debt servicing needs. Despite these movements, the net cash position remained stable, with closing cash and cash equivalents negligible in most years.

Summary and Investor Considerations

Over the five-year period, Cool Caps has exhibited strong revenue growth and asset expansion, signalling successful scaling of operations. Profitability, while improving in absolute terms, has seen margin compression due to rising costs and interest expenses. The company’s increasing leverage warrants close monitoring, as higher debt levels could impact financial flexibility.

Investors should weigh the company’s growth potential against margin pressures and elevated liabilities. The steady increase in reserves and shareholders’ funds is a positive indicator of retained earnings and financial resilience. However, the modest operating profit margin in the latest year suggests challenges in cost management or competitive pricing.

Overall, Cool Caps presents a compelling growth story with some cautionary signals on profitability and leverage. Prospective investors may benefit from a detailed analysis of sector dynamics and the company’s strategic initiatives to sustain margins and manage debt.

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