How has been the historical performance of Deep Diamond?

Revenue and Operating Income Trends

Deep Diamond's net sales have experienced a marked contraction from ₹7.67 crores in the fiscal year ending March 2023 to ₹1.26 crores in March 2025. This steep decline of over 80% in two years highlights considerable challenges in maintaining top-line growth. Correspondingly, total operating income mirrored this trend, falling from ₹7.67 crores to ₹1.26 crores over the same period. The absence of other operating income throughout these years indicates the company’s reliance solely on its core business activities for revenue generation.

Cost Structure and Profitability

Examining the cost components, Deep Diamond has successfully reduced its total expenditure excluding depreciation from ₹6.07 crores in March 2023 to ₹0.81 crores in March 2025. Notably, raw material costs and purchase of finished goods have diminished significantly, aligning with the lower sales volume. Employee costs have also been trimmed, albeit modestly, from ₹0.24 crores to ₹0.17 crores, reflecting operational adjustments.

Operating profit before other income (PBDIT excl. OI) swung from a healthy ₹1.60 crores in March 2023 to a negative ₹0.25 crores in March 2024, before rebounding to ₹0.45 crores in March 2025. The inclusion of other income, which rose to ₹0.75 crores in the latest fiscal year, helped lift the overall operating profit to ₹1.20 crores. This improvement is indicative of the company’s efforts to diversify income streams or capitalise on non-operating gains.

Profitability Margins and Earnings

Deep Diamond’s profit before tax declined from ₹1.73 crores in March 2023 to ₹1.09 crores in March 2025, yet the company maintained a positive trajectory in net profit after tax, which stood at ₹0.86 crores in the latest fiscal year. The profit after tax margin improved significantly to 69.84% in March 2025 from around 16.4% in the preceding two years, underscoring enhanced cost control and operational efficiency despite lower sales.

Earnings per share (EPS) followed a similar pattern, dropping from ₹0.26 in March 2023 to ₹0.08 in March 2024 before recovering to ₹0.17 in March 2025. This volatility reflects the company’s fluctuating profitability but also suggests a stabilising outlook.

Balance Sheet and Financial Position

On the balance sheet front, Deep Diamond has strengthened its shareholder’s funds from ₹20.42 crores in March 2024 to ₹22.36 crores in March 2025, supported by an increase in reserves. The company remains virtually debt-free on a long-term basis, with only short-term borrowings reducing from ₹1.66 crores to ₹0.61 crores, signalling prudent financial management and reduced leverage risk.

Non-current investments have grown from ₹7.97 crores to ₹10.03 crores, indicating a strategic allocation of resources towards long-term assets. Current assets have slightly decreased but remain stable at around ₹5 crores, with cash and bank balances steady at approximately ₹3.3 crores, ensuring adequate liquidity.

Cash Flow and Liquidity

Cash flow data reveals a turnaround from negative operating cash flows of ₹-5 crores in March 2024 to a neutral position in March 2025. The company’s net cash inflow/outflow balanced out in the latest fiscal year, reflecting improved working capital management and operational cash generation. Financing activities in the previous year helped offset cash outflows, but no significant financing movements were recorded in the latest period.

Summary of Historical Performance

In summary, Deep Diamond’s historical performance over the last three years has been characterised by a sharp decline in sales and operating income, followed by a stabilisation phase with improved profitability margins and a stronger balance sheet. The company’s ability to reduce costs and enhance profit margins despite lower revenues is a positive sign, although the contraction in top-line remains a concern for sustained growth.

Financial discipline is evident in the reduction of short-term borrowings and the accumulation of reserves, which have bolstered shareholder equity. Liquidity remains adequate with consistent cash balances and a neutral cash flow position in the latest fiscal year. Investors should weigh the company’s improving profitability against the backdrop of declining sales when considering its future prospects.

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