Revenue and Operating Income Trends
Examining Mega Corp.'s net sales over the seven-year period, the company experienced notable volatility. Net sales peaked at ₹2.25 crore in March 2018 but slightly declined to ₹2.18 crore by March 2019. Earlier years showed a mixed pattern, with sales as low as ₹0.53 crore in March 2014 and a rebound to ₹1.56 crore in March 2013. Other operating income was generally minimal or absent in recent years, contributing little to total operating income, which closely mirrored net sales figures. The total operating income ranged from ₹0.62 crore in March 2014 to a high of ₹2.26 crore in March 2013, reflecting the company's fluctuating market engagement.
Profitability and Margins
Operating profit before depreciation, interest, and tax (PBDIT) excluding other income showed significant swings. The company recorded a strong operating profit of ₹1.36 crore in March 2019, a marked recovery from a loss of ₹1.18 crore in March 2018. Earlier years saw modest profits, with March 2017 and March 2015 posting ₹0.76 crore and ₹0.86 crore respectively, while March 2014 reflected a loss. The operating profit margin excluding other income was notably high at 62.39% in March 2019, contrasting sharply with a negative margin of -52.91% in March 2018. Gross profit margins followed a similar pattern, with a peak of 73.56% in March 2017 and a trough of -97.76% in March 2018.
Profit after tax (PAT) also exhibited volatility. The company posted a modest PAT of ₹0.06 crore in March 2019, recovering from a significant loss of ₹2.91 crore in March 2018. Positive PAT figures were recorded in most years except for March 2014 and March 2013, which showed losses. Correspondingly, the PAT margin improved to 2.75% in March 2019 from a negative 130.49% in the prior year, indicating a return to profitability albeit at a low margin.
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Cost Structure and Expenses
Throughout the period, Mega Corp. maintained a relatively low expenditure profile excluding depreciation. Total expenditure excluding depreciation was ₹0.82 crore in March 2019, a significant reduction from ₹3.43 crore in March 2018. Employee costs fluctuated, rising to ₹0.48 crore in March 2019 from ₹0.40 crore the previous year, while manufacturing expenses were absent in the latest year but had been present in earlier years. Other expenses showed a sharp decline from ₹3.03 crore in March 2018 to ₹0.34 crore in March 2019, contributing to the improved profitability in the latest fiscal year.
Balance Sheet and Financial Position
On the balance sheet front, shareholder's funds remained relatively stable, standing at ₹24.06 crore in March 2019, slightly up from ₹24.00 crore in March 2018 but down from ₹26.91 crore in March 2017. The company reported no long-term or short-term borrowings during this period, indicating a debt-free status. Total liabilities decreased from ₹37.71 crore in March 2018 to ₹34.94 crore in March 2019. Non-current assets were minimal, with net block values declining steadily from ₹6.14 crore in March 2014 to ₹4.27 crore in March 2019, reflecting asset depreciation and limited capital expenditure. Non-current investments increased modestly to ₹4.38 crore in March 2019, suggesting some allocation towards long-term financial assets.
Cash Flow and Liquidity
Cash flow from operating activities was consistently negative, with a ₹2.00 crore outflow in March 2019, indicating challenges in generating cash from core operations. Investing activities provided positive cash inflows, notably ₹2.00 crore in March 2019, reflecting asset sales or investment realisations. Financing activities remained neutral, with no significant inflows or outflows recorded. The company maintained minimal cash and bank balances, with ₹0.27 crore reported in March 2019, up from ₹0.09 crore the previous year, suggesting a cautious liquidity position.
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Summary and Outlook
In summary, Mega Corp.'s historical performance has been characterised by fluctuating revenues and profitability, with a notable recovery in the fiscal year ending March 2019 after a challenging 2018. The company’s operating margins improved significantly, supported by reduced expenses and stable operating income. Despite the return to profitability, cash flow from operations remains a concern, highlighting the need for improved working capital management. The balance sheet reflects a conservative financial structure with no debt and stable shareholder equity, though asset values have declined over time.
Investors should consider these factors alongside sector dynamics and market conditions when evaluating Mega Corp.'s prospects. The company’s ability to sustain profitability and enhance cash generation will be critical for future growth and shareholder value creation.
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