How has been the historical performance of Goyal Associates?

Revenue and Profitability Trends

Examining the net sales figures from fiscal year ending March 2019 through March 2025 reveals a volatile pattern. The company recorded its highest sales in March 2019, followed by a sharp decline in subsequent years, with a notable dip in March 2021. Sales rebounded moderately in the years after but have not returned to the peak levels seen in 2019. Total operating income mirrored this trend, reflecting the absence of other operating income throughout the period.

Operating profit margins have shown significant variability. After a negative margin in 2019, the company improved to positive territory by 2020 and 2021, though with modest profitability. The margin sharply declined into negative in 2022, before recovering strongly in the last two years, reaching over 33% in the latest fiscal year. This recovery is indicative of improved operational efficiency or cost management despite lower sales volumes.

Profit after tax (PAT) margins followed a similar trajectory, with losses in 2019 and 2022 but positive returns in other years. The latest fiscal year saw a PAT margin exceeding 28%, signalling a robust turnaround in bottom-line performance. Earnings per share (EPS) also reflect this recovery, moving from negative in 2019 and 2022 to positive and gradually increasing in recent years.

Cost Structure and Expenses

The company’s expenditure profile shows zero raw material costs across all years, suggesting a business model not reliant on raw inputs or possibly a service-oriented operation. Purchase of finished goods was significant in 2019 and 2020 but absent thereafter. Employee costs have steadily increased, reaching nearly ₹0.91 crore in the latest year, reflecting either workforce expansion or wage inflation. Manufacturing expenses and other operating costs have remained relatively stable, with minor fluctuations.

Interest expenses have been minimal but consistent since 2021, indicating some level of borrowing. Depreciation charges have also increased gradually, consistent with asset additions or capitalisation policies.

Balance Sheet and Financial Position

On the balance sheet front, shareholder’s funds have generally increased from ₹2.28 crore in 2019 to ₹3.25 crore in 2024, despite intermittent negative reserves in earlier years. The equity capital rose slightly in the latest fiscal year, suggesting possible capital infusion. The company carries no long-term borrowings but has short-term borrowings that peaked in 2021 at over ₹3 crore before declining to around ₹1.14 crore in 2024.

Total liabilities have fluctuated, peaking in 2021 and then reducing, which aligns with the reduction in short-term debt. Non-current liabilities have decreased over time, indicating a possible deleveraging or settlement of long-term obligations.

Asset-wise, the company holds a modest net block of fixed assets, which increased from zero in 2020 to ₹0.38 crore in 2024. Non-current assets include long-term loans and advances, which have grown significantly, suggesting investments or receivables with longer maturities. Current assets have declined sharply from ₹5.23 crore in 2019 to under ₹1 crore in recent years, reflecting reduced inventories and sundry debtors.

Cash Flow and Liquidity

Cash flow data indicates limited activity, with no reported cash inflows or outflows in recent years. Changes in working capital were positive in 2022 but negative in 2021, suggesting some volatility in operational liquidity. The absence of cash flow from investing and financing activities in recent years points to a relatively static capital expenditure and financing structure.

Cash and bank balances have remained low, generally below ₹0.1 crore in recent years, which may raise concerns about liquidity buffers. The company’s net current assets have been negative since 2021, indicating current liabilities exceed current assets, a potential liquidity risk that investors should monitor closely.

Summary of Historical Performance

Overall, Goyal Associates has demonstrated a mixed financial performance over the past six years. While sales and operating income have declined from earlier highs, profitability margins have improved markedly in the last two years. The company has managed to reduce its debt levels and improve shareholder equity, though liquidity remains constrained. Investors should weigh the recent profitability gains against the challenges of volatile revenue and tight working capital.

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