How has been the historical performance of Harsha Engg Intl?

Revenue and Profit Trends

Over the four-year period ending March 2025, Harsha Engg Intl’s net sales have shown a gradual upward trajectory, rising from ₹1,321.48 crores in FY22 to ₹1,407.65 crores in FY25. This steady increase reflects the company’s ability to expand its market presence and maintain demand for its engineering products. Total operating income mirrored this trend, with no other operating income reported, indicating reliance on core business activities.

Operating profit before other income (PBDIT excl OI) remained relatively stable, fluctuating between ₹169.03 crores in FY22 and ₹174.94 crores in FY25, with a peak of ₹189.29 crores in FY23. Including other income, operating profit rose to ₹212.67 crores in FY25, up from ₹186.55 crores in FY22, signalling effective management of ancillary income streams.

However, profit after tax (PAT) experienced some volatility, peaking at ₹123.28 crores in FY23 before declining to ₹89.31 crores in FY25. This dip was influenced by increased tax expenses and exceptional items, notably a negative exceptional charge of ₹27.68 crores in FY25. Despite this, the company maintained a positive PAT margin, though it contracted from 9.04% in FY23 to 6.34% in FY25.

Cost Management and Margins

Raw material costs, a significant component of total expenditure, decreased from ₹799.16 crores in FY22 to ₹728.83 crores in FY25, reflecting improved procurement efficiencies or favourable input prices. Employee costs rose steadily from ₹145.15 crores to ₹181.55 crores over the same period, consistent with business expansion and inflationary pressures.

Other expenses also increased moderately, reaching ₹312.48 crores in FY25. Despite these rising costs, the company managed to sustain operating profit margins around 12.4% in FY25, slightly below the 13.88% margin recorded in FY23. Gross profit margins followed a similar pattern, contracting from 14.9% in FY23 to 12.52% in FY25, indicating some margin pressure in recent years.

Balance Sheet and Financial Position

Harsha Engg Intl’s balance sheet has strengthened considerably, with shareholder’s funds more than doubling from ₹521.86 crores in FY22 to ₹1,254.14 crores in FY25. This growth was driven by a substantial increase in reserves, which rose from ₹444.61 crores to ₹1,163.10 crores, reflecting retained earnings accumulation and capital management.

Total liabilities increased from ₹1,158.26 crores in FY22 to ₹1,691.06 crores in FY25, largely due to higher borrowings and trade payables. Notably, long-term borrowings declined sharply in FY24 but surged again to ₹94.82 crores in FY25, while short-term borrowings decreased from ₹240.64 crores in FY22 to ₹103.69 crores in FY25, indicating a shift in debt structure.

The company’s net block of fixed assets expanded steadily, reaching ₹413.93 crores in FY25, supported by increased capital work in progress, which jumped significantly to ₹161.40 crores. This suggests ongoing investment in capacity or technology upgrades. Current assets also grew, with total current assets rising to over ₹1,000 crores in FY25, bolstered by higher current investments and inventories.

Cash Flow and Liquidity

Cash flow from operating activities improved markedly, rising from ₹36 crores in FY22 to ₹206 crores in FY25, demonstrating enhanced operational cash generation. This was supported by positive changes in working capital, which contributed ₹37 crores in FY25 compared to a negative impact in earlier years. However, cash flow from investing activities remained negative, reflecting ongoing capital expenditure and investments, with outflows of ₹211 crores in FY25.

Financing activities showed mixed trends, with a modest inflow of ₹5 crores in FY25 following a significant inflow in FY23 and outflows in other years. The company maintained a stable cash and bank balance of ₹76.18 crores in FY25, supporting liquidity despite capital spending.

Summary and Outlook

Harsha Engg Intl’s historical performance reveals a company with steady revenue growth, consistent profitability, and a strengthening balance sheet. While profit margins have faced some pressure recently, the firm’s ability to generate operating cash flow and invest in its asset base is encouraging. The increase in reserves and shareholder equity underscores financial resilience, although fluctuations in borrowings and exceptional charges warrant close monitoring.

Investors should consider these factors alongside sector dynamics and market conditions when evaluating Harsha Engg Intl’s prospects. The company’s ongoing investments and operational improvements position it well for future growth, but margin trends and debt management will be key areas to watch.

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