How has been the historical performance of Gloster Ltd?

Revenue and Operating Performance Trends

Gloster Ltd’s net sales have demonstrated a general upward trend, rising from approximately ₹501 crores in March 2019 to ₹735 crores in March 2025. The company experienced a notable dip in sales during the fiscal years 2020 and 2021, coinciding with broader economic disruptions, but rebounded strongly thereafter. Total operating income mirrored this pattern, with no other operating income reported across the period.

Raw material costs have increased in line with sales, reaching ₹409 crores in the latest fiscal year, while employee costs have also risen steadily, reflecting workforce expansion or wage inflation. Interestingly, the company began incurring purchase costs for finished goods in the latest year, amounting to ₹39 crores, which was absent in prior years. Other expenses have also escalated, reaching nearly ₹164 crores in March 2025, indicating higher operational overheads.

Operating profit before other income (PBDIT excl OI) declined from a peak of ₹96 crores in March 2022 to ₹47 crores in March 2025, signalling margin pressures. Correspondingly, the operating profit margin dropped from 13.04% in 2022 to 6.33% in 2025. Despite this, other income contributed positively, helping the overall operating profit (PBDIT) to stand at ₹73 crores in the latest year, though still below earlier highs.

Profitability and Earnings Analysis

Gloster Ltd’s profitability has been volatile. Profit before tax peaked at ₹109 crores in March 2022 but turned negative in the latest fiscal year, registering a loss before tax of ₹1.2 crores in March 2025. This downturn was influenced by a sharp rise in interest expenses, which surged to ₹24 crores in 2025 from just ₹2.5 crores in 2024, reflecting increased borrowings or higher financing costs.

Depreciation expenses have also risen steadily, reaching nearly ₹50 crores in the latest year, which further weighed on earnings. Consequently, the company reported a net loss after tax of ₹13.35 crores in March 2025, reversing the positive earnings trend seen in previous years where profits ranged between ₹20 crores and ₹65 crores.

Earnings per share (EPS) followed a similar pattern, declining from a high of ₹82.18 in 2019 to a negative ₹12.2 in 2025, underscoring the recent profitability challenges. The PAT margin also contracted sharply to -1.82% in 2025 from a peak of 8.9% in 2022.

Balance Sheet and Capital Structure Developments

On the balance sheet front, shareholder’s funds have grown steadily from ₹931 crores in 2020 to ₹1,083 crores in 2025, supported by reserves accumulation. The company’s equity capital doubled in 2022 due to a capital raise, enhancing its financial base.

However, total liabilities have expanded significantly, reaching ₹2,018 crores in 2025 from ₹1,073 crores in 2020. This increase is largely attributable to a sharp rise in long-term borrowings, which escalated to ₹349 crores in 2025 from negligible levels in prior years. Short-term borrowings also increased markedly, indicating a higher reliance on debt financing.

Asset growth has been robust, with total assets rising to over ₹2,000 crores in 2025, driven by investments in gross block and capital work in progress. Net block assets increased to ₹1,102 crores, reflecting ongoing capital expenditure. Current assets more than doubled to ₹671 crores, supported by higher inventories and receivables.

Cash Flow and Liquidity Overview

Cash flow dynamics have been mixed. Operating cash flow was positive in most years until 2024 but turned negative in 2025, with a cash outflow of ₹99 crores, reflecting operational challenges and working capital pressures. Investing activities consistently showed cash outflows, peaking at ₹226 crores in 2025, indicative of ongoing capital investments.

Financing activities provided significant inflows in 2025, amounting to ₹340 crores, largely due to increased borrowings. This helped the company maintain a positive net cash inflow of ₹14 crores in 2025, despite operational cash deficits. Closing cash and cash equivalents stood at ₹22 crores in March 2025, up from ₹7 crores the previous year, signalling improved liquidity buffers.

Conclusion: A Mixed Historical Performance with Recent Challenges

Gloster Ltd’s historical performance reflects a company that has grown its top line steadily over the years but has faced margin compression and profitability setbacks recently. The sharp rise in debt and interest costs in the latest fiscal year has weighed heavily on earnings, resulting in a net loss. Nonetheless, the company’s asset base and shareholder equity have expanded, supported by capital investments and reserve accretion.

Investors should weigh the company’s strong revenue growth and asset expansion against the recent profitability pressures and increased leverage. The evolving financial profile suggests a transitional phase, where operational efficiencies and debt management will be critical to restoring earnings momentum and sustaining long-term value creation.

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