Revenue and Profitability Trends
Examining the consolidated annual results for the fiscal years ending March 2021 and March 2022, Sainik Finance's net sales declined from ₹20.79 crores to ₹15.62 crores, indicating a significant contraction in top-line performance. Other operating income remained negligible during this period, keeping total operating income aligned with net sales figures.
On the expenditure front, employee costs saw a modest increase from ₹0.62 crores to ₹0.70 crores, while other expenses decreased from ₹8.93 crores to ₹6.65 crores. Total expenditure excluding depreciation reduced from ₹9.55 crores to ₹7.35 crores, contributing to a slight improvement in operating profit before other income, which stood at ₹8.27 crores in March 2022 compared to ₹11.24 crores the previous year.
However, other income dropped sharply from ₹4.04 crores to ₹0.18 crores, resulting in a consolidated operating profit (PBDIT) decline from ₹15.28 crores to ₹8.45 crores. The company faced rising interest expenses, increasing from ₹16.84 crores to ₹17.67 crores, which heavily impacted profitability. Consequently, the gross profit before tax (PBDT) remained negative, worsening from a loss of ₹1.56 crores to ₹9.22 crores.
Profit after tax followed a similar downward trend, with losses deepening from ₹0.96 crores in March 2021 to ₹8.13 crores in March 2022. This translated into a negative earnings per share (EPS) of ₹7.47 in the latest fiscal year, compared to ₹0.88 the year before. The operating profit margin remained relatively stable at around 53%, but the net profit margin deteriorated significantly to -52.05%.
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Balance Sheet and Financial Position
On the balance sheet front, Sainik Finance's shareholder funds have declined from ₹43.24 crores in March 2021 to ₹35.56 crores in March 2022, reflecting the impact of accumulated losses. Total reserves also decreased from ₹32.36 crores to ₹24.68 crores over the same period. The company's equity capital remained steady at ₹10.88 crores, with a face value of ₹10 per share.
Total liabilities surged from ₹231.41 crores to ₹257.55 crores, driven primarily by a sharp increase in short-term borrowings, which rose from ₹162.41 crores to ₹208.75 crores. Non-current liabilities also increased substantially, indicating a higher debt burden and financial leverage. This elevated debt level has contributed to the high interest expenses that have weighed on profitability.
Asset-wise, total assets grew from ₹231.41 crores to ₹257.55 crores, with a notable increase in long-term loans and advances from ₹226.15 crores to ₹258.06 crores. Current assets, however, remained relatively low, with cash and bank balances marginally increasing to ₹0.06 crores in March 2022. The company’s net current assets were deeply negative, signalling liquidity pressures.
Book value per share adjusted for reserves declined from ₹39.74 to ₹32.68, mirroring the erosion in net worth. The absence of long-term borrowings and secured loans suggests reliance on short-term financing, which may pose refinancing risks.
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Cash Flow and Operational Insights
Cash flow analysis reveals a mixed picture. The company reported a negative profit before tax in March 2022 but returned to positive territory in subsequent years, with ₹6 crores in March 2025. Cash flow from operating activities fluctuated significantly, with a sharp negative outflow in March 2022 followed by a recovery to ₹16 crores in March 2025. Financing activities also showed volatility, with large inflows and outflows reflecting debt management efforts.
Closing cash and cash equivalents improved from negligible levels in earlier years to ₹7 crores by March 2025, indicating some strengthening of liquidity. However, the persistent negative net current assets and high debt levels remain areas of concern for financial stability.
Overall, Sainik Finance's historical performance highlights operational resilience in maintaining operating margins but is overshadowed by high interest costs and net losses. The company’s balance sheet reflects elevated leverage and liquidity challenges, which investors should carefully consider when analysing its financial health and future prospects.
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