How has been the historical performance of Purple Finance?

Revenue and Profitability Trends

Over the three-year period ending March 2025, Purple Finance’s net sales have shown a robust increase, rising from ₹2.56 crores in March 2023 to ₹14.72 crores in March 2025. This growth reflects a more than fivefold increase, signalling an expanding business scale. However, despite this revenue surge, the company has struggled to translate top-line growth into profitability. Operating profit before depreciation and interest (PBDIT) remained negative throughout, with losses widening from ₹5.56 crores in March 2023 to ₹18.88 crores in March 2025.

Employee costs and other expenses have escalated in tandem with revenue, with employee costs rising from ₹5.02 crores to ₹21.56 crores over the same period, indicating increased operational expenditure. Interest expenses also surged significantly, from ₹0.15 crores to ₹5.73 crores, reflecting higher borrowing costs or increased debt levels. Consequently, the company reported a net loss after tax of ₹15.55 crores in March 2025, deepening from losses of ₹6.33 crores in March 2023.

Balance Sheet and Financial Position

The company’s balance sheet has expanded considerably, with total assets growing from ₹58.49 crores in March 2023 to ₹143.83 crores in March 2025. Shareholders’ funds have also increased substantially, rising from ₹17.30 crores to ₹77.13 crores, supported by equity capital infusion and reserves growth. The equity capital increased from ₹23.02 crores to ₹44.82 crores, while reserves moved from a negative ₹5.98 crores to a positive ₹30.99 crores, indicating improved retained earnings or capital reserves.

However, liabilities have also risen sharply, with total liabilities more than doubling from ₹58.49 crores to ₹143.83 crores. Notably, short-term borrowings surged from a minimal ₹0.30 crores to ₹71.98 crores, highlighting a significant increase in reliance on short-term debt. Non-current liabilities also expanded, albeit at a slower pace. The company’s net block of fixed assets remained relatively stable, suggesting limited capital expenditure on tangible assets.

Cash Flow and Liquidity

Cash flow analysis reveals ongoing operational challenges. Cash flow from operating activities was negative in both March 2024 and March 2025, with outflows of ₹60 crores and ₹77 crores respectively, reflecting cash burn despite revenue growth. Investing activities consistently showed modest outflows, while financing activities provided substantial inflows, particularly in March 2025 with ₹92 crores raised, likely through equity or debt issuance to support operations and balance sheet expansion.

Closing cash and cash equivalents improved markedly to ₹16 crores in March 2025 from ₹3 crores the previous year, indicating a stronger liquidity position at the fiscal year-end. Nonetheless, the negative operating cash flow underscores the company’s need to improve operational efficiency and cash generation to sustain growth.

Summary and Investor Considerations

In summary, Purple Finance has demonstrated impressive revenue growth over the last three years, expanding its scale significantly. However, the company has yet to achieve profitability, with widening losses and negative operating margins reflecting ongoing cost pressures and elevated interest expenses. The balance sheet shows a marked increase in borrowings, particularly short-term debt, which raises questions about financial leverage and liquidity risk despite an improved cash position at the end of the latest fiscal year.

Investors should weigh the company’s growth potential against its current operational inefficiencies and financial risks. The rising equity base and reserves provide some cushion, but sustained losses and cash flow deficits highlight the need for strategic improvements. Monitoring future quarters for margin improvement and debt management will be critical to assessing Purple Finance’s path to sustainable profitability.

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