Revenue and Operating Income Growth
The company’s net sales surged from ₹4.40 crores in March 2015 to ₹19.79 crores in March 2016, reflecting a robust expansion in its core business activities. Additionally, other operating income contributed ₹2.60 crores in the latter year, whereas it was nil in the previous year, pushing total operating income to ₹22.38 crores in March 2016 from ₹4.40 crores a year earlier. This substantial increase underscores the company’s ability to scale its operations effectively within a year.
Cost Structure and Profitability Margins
Despite the impressive revenue growth, the operating profit margin (excluding other income) declined from 5.13% in March 2015 to 1.97% in March 2016. This was primarily due to a sharp rise in the purchase of finished goods, which escalated from ₹5.96 crores to ₹18.90 crores, and an increase in manufacturing expenses. The company also experienced a positive change in stock levels, which improved by ₹2.23 crores compared to a negative adjustment the previous year.
Operating profit (PBDIT) nearly doubled from ₹0.23 crores to ₹0.44 crores, while profit after tax (PAT) tripled from ₹0.10 crores to ₹0.30 crores. However, the PAT margin contracted from 2.32% to 1.34%, indicating that while absolute profits increased, profitability relative to revenue faced some pressure.
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Balance Sheet and Capital Structure
Econo Trade Indi maintained a stable equity capital base of ₹18.67 crores across both years, with reserves marginally increasing from ₹17.55 crores to ₹17.84 crores. Consequently, shareholder’s funds rose slightly to ₹36.51 crores in March 2016 from ₹36.22 crores in March 2015. The company reported no long-term or short-term borrowings during this period, indicating a debt-free capital structure which reduces financial risk.
On the asset side, total assets increased modestly from ₹36.59 crores to ₹36.97 crores. Inventories decreased from ₹8.74 crores to ₹6.49 crores, while cash and bank balances nearly doubled from ₹0.35 crores to ₹0.69 crores, reflecting improved liquidity. Trade payables and current liabilities remained minimal, supporting a healthy working capital position.
Cash Flow Dynamics
The company’s cash flow from operating activities showed a marked improvement, turning positive at ₹3.19 crores in March 2016 compared to a negative ₹2.86 crores in the previous year. This was driven by favourable changes in working capital, which improved by ₹2.75 crores against a negative movement of ₹2.99 crores earlier. Conversely, cash flow from investing activities was negative at ₹2.86 crores in March 2016, reversing from a positive ₹2.97 crores in March 2015, suggesting increased investment outlays during the year.
Overall, net cash inflow increased to ₹0.34 crores from ₹0.11 crores, and closing cash and cash equivalents nearly doubled, signalling enhanced cash management and operational efficiency.
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Summary of Historical Performance
In summary, Econo Trade Indi exhibited strong top-line growth between March 2015 and March 2016, with net sales increasing more than fourfold. Profitability in absolute terms improved significantly, although margins contracted due to rising costs. The company’s balance sheet remained robust with no debt and a slight increase in shareholder equity. Cash flow from operations turned positive, reflecting better working capital management and operational cash generation.
While the company’s earnings per share rose from ₹0.05 to ₹0.16, investors should note the margin compression and increased expenditure on finished goods. The absence of borrowings and improved liquidity position are positive indicators of financial health. Overall, Econo Trade Indi’s historical performance suggests a company in expansion mode with improving profitability and a solid capital base, though margin pressures warrant close monitoring going forward.
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