Revenue and Operating Income Growth
Between March 2010 and March 2012, Nikhil Adhesives demonstrated a consistent increase in net sales, rising from ₹121.81 crores in 2010 to ₹164.90 crores in 2012. This growth was complemented by a modest rise in other operating income, which contributed to total operating income reaching ₹166.43 crores by March 2012, up from ₹121.81 crores two years prior. The company’s ability to expand its top line reflects a positive demand environment and possibly an expanding market share within the adhesives sector.
Cost Structure and Expenditure Trends
Raw material costs, a significant component of total expenditure, increased substantially from ₹70.86 crores in 2010 to ₹115.68 crores in 2012, aligning with the rise in sales volume. Purchase of finished goods showed some volatility, decreasing from ₹29.71 crores in 2010 to ₹22.59 crores in 2011 before rising again to ₹27.85 crores in 2012. Employee costs and manufacturing expenses also saw incremental increases, indicating investment in workforce and production capabilities. Overall, total expenditure excluding depreciation rose from ₹115.02 crores in 2010 to ₹158.23 crores in 2012, reflecting the company’s scaling operations.
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Profitability and Margins
Operating profit before depreciation and interest (PBDIT) showed a slight decline from ₹7.39 crores in 2010 to ₹8.30 crores in 2012, with a peak of ₹6.94 crores in 2011. Operating profit margins excluding other income decreased from 5.58% in 2010 to 4.93% in 2012, signalling some pressure on operational efficiency. Gross profit margin also contracted significantly from 3.86% in 2010 to 1.38% in 2012. Profit before tax dropped sharply from ₹3.74 crores in 2010 to ₹1.15 crores in 2012, impacted by exceptional items and interest expenses. Consequently, net profit after tax declined from ₹2.27 crores in 2010 to ₹0.77 crores in 2012, with the profit after tax margin falling below 0.5% in the latest year.
Earnings Per Share and Shareholding
Earnings per share (EPS) mirrored the net profit trend, decreasing from ₹5.81 in 2010 to ₹1.98 in 2012. The equity capital remained stable at ₹3.90 crores with a face value of ₹10 per share. Public shareholding and pledged promoter holdings were steady at approximately 40.25% and 24.62% respectively, indicating consistent ownership structure during this period.
Cash Flow Analysis
Cash flow from operating activities showed variability, with ₹3.91 crores in 2010 rising to ₹9.98 crores in 2011 before moderating to ₹2.02 crores in 2012. Investing activities consistently reflected cash outflows, peaking at ₹10.08 crores in 2012, suggesting ongoing capital expenditure or acquisitions. Financing activities fluctuated, with a positive inflow of ₹7.67 crores in 2012 contrasting with outflows in earlier years. The net cash inflow/outflow remained negative in 2012 at ₹0.39 crores, while cash and cash equivalents declined from ₹2.42 crores in 2010 to ₹0.79 crores in 2012, indicating tightening liquidity.
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Summary of Historical Performance
Overall, Nikhil Adhesives experienced commendable revenue growth from 2010 to 2012, reflecting expanding business operations. However, profitability margins and net earnings faced downward pressure, partly due to rising raw material costs and exceptional charges. The company’s cash flow position showed signs of strain, with reduced operating cash inflows and increased investing outflows. While the stable equity base and shareholding pattern provide a foundation, the declining profitability and liquidity metrics suggest challenges in operational efficiency and financial management during this period.
Investor Considerations
Investors analysing Nikhil Adhesives’ historical performance should weigh the robust top-line growth against the contraction in profit margins and cash reserves. The company’s ability to manage costs and improve operational leverage will be critical for future earnings stability. Additionally, monitoring cash flow trends and capital expenditure plans will provide insights into the sustainability of growth and financial health.
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