How has been the historical performance of Raunaq Intl.?

Revenue and Profitability Trends

Raunaq Intl.’s net sales have seen a steep decline from ₹92.82 crores in March 2019 to just ₹5.77 crores in March 2023. This dramatic drop reflects a challenging operating environment and possibly structural changes within the company or its market. Total operating income followed a similar trajectory, peaking in 2019 before contracting sharply in subsequent years.

The company’s operating profit margins have been under considerable pressure, with margins turning deeply negative in recent years. For instance, the operating profit margin excluding other income was a negative 73.8% in March 2023, compared to a modest positive margin of 2.95% in March 2017. This deterioration is mirrored in the net profit figures, where Raunaq Intl. posted losses consistently from 2018 onwards, culminating in a net loss of ₹2.38 crores in the latest fiscal year.

Interest expenses have also declined from ₹4.62 crores in 2019 to ₹0.33 crores in 2023, indicating some reduction in debt servicing costs, although the company remains unprofitable. Earnings per share have reflected these losses, with a negative ₹7.13 per share in March 2023, down from a positive ₹3.27 in 2017.

Balance Sheet and Asset Quality

The company’s total assets have contracted from over ₹101 crores in 2019 to ₹32.56 crores in 2021, reflecting asset sales, write-downs, or operational downsizing. Shareholders’ funds have also diminished significantly, from ₹42.44 crores in 2017 to ₹13.54 crores in 2021, indicating erosion of net worth over time.

Long-term borrowings have fluctuated, peaking at ₹12.78 crores in 2020 before falling to ₹5.07 crores in 2021. Short-term borrowings have similarly decreased, suggesting some deleveraging efforts. However, trade payables and other current liabilities remain substantial, indicating ongoing working capital pressures.

Non-current assets, including investments and loans, have also declined, with total non-current assets dropping from ₹47.73 crores in 2018 to ₹17.61 crores in 2021. The net block of fixed assets has reduced, consistent with the overall downsizing trend.

Cash Flow and Liquidity Position

Cash flow from operating activities has been inconsistent, with positive inflows in some years but negative or negligible in others. For example, operating cash flow was ₹1 crore in 2021 but zero in 2020. Investing activities have generally seen modest inflows or outflows, while financing activities have consistently been negative, reflecting repayments or reduced borrowings.

The company’s cash and bank balances have declined from ₹17.81 crores in 2016 to zero in 2021, underscoring liquidity constraints. Net cash inflows and outflows have been minimal or negative in recent years, highlighting the challenges in maintaining a healthy cash position.

Summary and Investor Considerations

Overall, Raunaq Intl. has faced a challenging period marked by a steep decline in sales and profitability, erosion of shareholder equity, and liquidity pressures. The company’s financial health has weakened considerably since 2017, with persistent losses and shrinking asset base. While some reduction in debt levels is evident, the operating environment remains difficult, as reflected in negative margins and cash flow constraints.

Investors analysing Raunaq Intl. should weigh these historical trends carefully, considering the company’s ability to stabilise revenues and return to profitability. The significant contraction in scale and financial metrics suggests a need for strategic reassessment or restructuring to restore value.

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