How has been the historical performance of H P Cotton Tex?

Revenue and Profitability Trends

Over the fiscal years ending March 2023 to March 2025, H P Cotton Tex’s net sales have shown a consistent upward trajectory. The company’s revenue increased from ₹83.98 crores in March 2023 to ₹128.13 crores in March 2025, reflecting a robust growth of over 52% in two years. This growth was accompanied by a steady rise in total operating income, which matched net sales as there was no other operating income reported during this period.

Despite the revenue growth, the company faced challenges in profitability in the earlier years. In March 2023, the operating profit before depreciation, interest, and tax (PBDIT) was negative at ₹-9.47 crores, with a corresponding net loss after tax of ₹-18.07 crores. However, by March 2024, the company had narrowed its losses significantly, reporting a positive PBDIT of ₹5.97 crores and a net profit of ₹0.90 crores. The turnaround became more pronounced in March 2025, with PBDIT rising to ₹13.82 crores and net profit reaching ₹2.57 crores.

Operating profit margins improved markedly from a negative 13.75% in March 2023 to a positive 9.72% in March 2025, signalling enhanced operational efficiency. Similarly, the net profit margin improved from a loss of 21.52% to a modest gain of 2.01% over the same period. These improvements were achieved despite rising raw material costs and employee expenses, which increased in line with the company’s expanding scale of operations.

Balance Sheet and Financial Position

H P Cotton Tex’s balance sheet reflects a cautious approach to leverage and asset management. Shareholders’ funds increased steadily from ₹12.99 crores in March 2023 to ₹16.24 crores in March 2025, supported by accumulated reserves. The company’s total liabilities decreased from ₹92.32 crores in March 2023 to ₹90.02 crores in March 2025, indicating a slight reduction in overall debt burden.

Long-term borrowings fluctuated but remained relatively stable, with a slight increase to ₹8.88 crores in March 2025 from ₹8.57 crores in March 2023. Short-term borrowings showed a gradual decline from ₹31.80 crores to ₹27.07 crores over the same period, suggesting improved working capital management. The net block of fixed assets decreased marginally, reflecting normal depreciation and limited capital expenditure.

Current assets rose from ₹49.42 crores in March 2023 to ₹52.07 crores in March 2025, while current liabilities remained broadly stable, resulting in a negative net current asset position. This indicates ongoing working capital pressures, which the company appears to be managing carefully.

Cash Flow and Operational Efficiency

Cash flow from operating activities showed improvement, rising from zero in March 2023 to ₹7 crores in March 2025. This positive cash generation aligns with the company’s return to profitability and improved operational performance. Investing activities remained modest, with a small outflow of ₹1 crore in the latest fiscal year, reflecting limited capital expenditure. Financing activities saw net outflows, indicating repayments or reductions in borrowings.

The company maintained a stable cash and bank balance, though relatively low, which underscores the importance of efficient working capital management going forward. Profit before tax turned positive in March 2025 at ₹3.80 crores, a significant recovery from losses in previous years.

Summary and Outlook

In summary, H P Cotton Tex has experienced a significant recovery in its financial health over the last three years. The company’s revenue growth has been strong, supported by improved operational margins and a return to profitability. While the balance sheet shows manageable leverage and stable asset levels, working capital remains an area requiring attention due to negative net current assets.

Cash flow trends are encouraging, with positive operating cash generation reflecting better business fundamentals. Earnings per share have rebounded from negative values to a positive ₹6.56 in March 2025, signalling enhanced shareholder value. Investors should monitor the company’s ability to sustain profitability and manage working capital efficiently as it continues to grow.

Overall, H P Cotton Tex’s historical performance indicates a company on a recovery path with improving financial metrics, though challenges remain in optimising capital structure and operational efficiency.

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