How has been the historical performance of Precot?

Revenue and Operating Performance Trends

Precot's net sales have experienced variability over the last seven fiscal years. The company recorded its peak revenue in the year ending March 2022, with net sales reaching close to ₹993 crores. However, this was followed by a decline in subsequent years, with sales dropping to approximately ₹868 crores by March 2025. Despite this dip, the revenue figures for the latest fiscal year still represent a recovery from the lows seen in the 2021 period, which was impacted by broader economic challenges.

Operating profit margins have mirrored this volatility. The operating profit margin excluding other income peaked at nearly 20% in March 2022, reflecting strong operational efficiency. This margin contracted sharply in the following year to just above 3%, before rebounding to over 13% by March 2025. Such swings indicate periods of both operational strain and recovery, highlighting the company's sensitivity to market and cost pressures.

Profitability and Earnings Analysis

Profit after tax (PAT) has shown a similarly uneven pattern. The company posted a significant PAT of over ₹105 crores in March 2022, followed by a steep loss in March 2023. The latest fiscal year saw a return to profitability with PAT around ₹52 crores before adjustments, and a consolidated net profit of nearly ₹33 crores. Earnings per share (EPS) reflect this trend, with a high of nearly ₹88 in 2022, a negative EPS in 2023, and a recovery to ₹27.41 in 2025. These figures underscore the company's recent turnaround from losses to sustainable profits.

Balance Sheet and Financial Position

Precot's balance sheet reflects steady growth in shareholder funds, rising from approximately ₹311 crores in 2020 to ₹449 crores in 2025. This increase is supported by a consistent build-up of reserves, indicating retained earnings accumulation. The company's total liabilities have remained relatively stable around ₹930-950 crores in recent years, with total debt reducing from a peak of nearly ₹378 crores in 2023 to ₹326 crores in 2025, signalling efforts to manage leverage.

On the asset side, net block values have hovered around ₹430-470 crores, showing moderate capital investment and depreciation trends. Current assets have fluctuated, with inventories and sundry debtors maintaining sizeable levels, reflecting operational scale. Net current assets have improved from negative territory in 2020 and 2021 to a positive ₹21 crores by 2025, suggesting better working capital management.

Cash Flow and Liquidity

Cash flow from operating activities has shown a positive trajectory, increasing from ₹26 crores in 2021 to ₹115 crores in 2025. This improvement highlights enhanced cash generation capacity despite earlier challenges. Investing activities have consistently been cash outflows, reflecting ongoing capital expenditure, while financing activities have mostly been outflows, indicating debt repayments and reduced reliance on external funding. The company’s net cash position remains modest, with closing cash and equivalents near zero in recent years, underscoring a focus on utilising cash efficiently within operations.

Summary of Historical Performance

Overall, Precot's historical performance has been characterised by cyclical fluctuations in revenue and profitability, with a notable peak in fiscal 2022 followed by a challenging year in 2023. The company has since demonstrated a recovery in key financial metrics, including operating margins, net profit, and cash flow generation. Its balance sheet shows a stable equity base with manageable debt levels and improving working capital. These factors collectively suggest that Precot has navigated through a period of volatility and is currently on a path towards more sustainable financial health.

Investors analysing Precot should consider both the company's demonstrated ability to rebound from losses and the inherent volatility in its earnings and margins. The recent improvement in profitability and cash flows may indicate a positive phase ahead, but historical variability warrants cautious optimism.

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