How has been the historical performance of Fiberweb (India)?

Revenue and Profitability Trends

Over the seven-year period ending March 2022, Fiberweb's net sales demonstrated considerable volatility. The company reached its peak revenue in fiscal 2018 with ₹286.13 crores, followed by a sharp decline to ₹95.40 crores by March 2022. This downward trend reflects challenges in maintaining sales momentum post-2018. Operating profit margins, excluding other income, have generally hovered between 12.6% and 20.9%, peaking in fiscal 2021 at 20.86%. Despite the revenue contraction, the firm managed to sustain a positive operating profit margin of 15.69% in the latest fiscal year.

Profit after tax (PAT) margins have remained relatively stable, fluctuating between 10.4% and 13.4% in most years, with an exception in 2018 when the margin was 12.69%. The consolidated net profit peaked at ₹36.31 crores in 2018 but declined to ₹11.34 crores by 2022. Earnings per share (EPS) followed a similar pattern, reaching a high of 12.61 in 2018 before settling at 3.94 in the most recent fiscal year.

Cost Structure and Operating Efficiency

Raw material costs have consistently represented the largest expense component, accounting for a substantial portion of total operating income. For instance, in fiscal 2018, raw materials consumed ₹232.24 crores against total operating income of ₹286.13 crores. This ratio has improved somewhat in recent years, with raw material costs at ₹61.58 crores in 2022 against ₹95.40 crores in operating income. Other expenses such as employee costs have remained relatively stable, averaging around ₹4 to ₹5 crores annually. Notably, the company reported zero interest expenses in the latest two fiscal years, indicating a debt-free position during this period.

Depreciation charges have fluctuated, peaking at ₹5.13 crores in 2021 before declining to ₹2.19 crores in 2022, reflecting changes in asset utilisation and capital expenditure.

Balance Sheet and Asset Base

Fiberweb's total assets have grown steadily from ₹117.77 crores in 2017 to ₹176.32 crores in 2022. The net block of fixed assets increased significantly from ₹38.80 crores in 2017 to ₹84.25 crores in 2022, indicating ongoing investments in property, plant, and equipment. Capital work in progress also rose to ₹9.71 crores in 2022, suggesting continued expansion or upgrades.

Shareholders' funds have expanded from ₹92.38 crores in 2017 to ₹171.15 crores in 2022, supported by rising reserves which stood at ₹142.35 crores in the latest fiscal year. The company has maintained a clean debt profile, with no long-term borrowings reported since 2017 and only a short-term borrowing of ₹6.11 crores in 2020, which was cleared subsequently.

Cash Flow and Liquidity Position

Operating cash flow has generally been positive, with ₹8 crores generated in 2022, though this is lower than the ₹21 crores recorded in 2021. Investing activities have consistently resulted in cash outflows, reflecting ongoing capital expenditure, with ₹9 crores spent in 2022. Financing activities have been minimal in recent years, with no cash inflows or outflows reported in 2022, indicating a stable capital structure without new borrowings or equity issuance.

Cash and bank balances have remained modest, fluctuating between ₹3 crores and ₹21 crores over the years, closing at ₹6 crores in 2022. The company’s net current assets have improved steadily, reaching ₹75.26 crores in 2022, supporting operational liquidity.

Summary of Historical Performance

In summary, Fiberweb (India) has experienced a peak in revenue and profitability around 2018, followed by a period of contraction and stabilisation. The company has maintained profitability and positive cash flows despite revenue declines, supported by prudent cost management and a debt-free balance sheet. Asset investments have continued, signalling a focus on long-term capacity and efficiency. While earnings per share have decreased from their highs, the firm’s operating margins and net profit margins remain respectable within its sector context.

Investors analysing Fiberweb should consider the cyclical nature of its revenue alongside its strong balance sheet and cash flow discipline. The company’s ability to sustain profitability amid fluctuating sales volumes is a key strength, though future growth will depend on market conditions and operational execution.

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