How has been the historical performance of SEPC?

Revenue and Operating Performance Trends

SEPC's net sales have experienced considerable fluctuations over the past seven years. After peaking at over ₹1,200 crores in FY20 and FY19, sales sharply declined to below ₹600 crores by FY25. The period between FY21 and FY23 saw a steep drop, with net sales falling to under ₹380 crores in FY23. However, the latest fiscal year shows a modest rebound, with sales increasing to nearly ₹598 crores in FY25, indicating a potential stabilisation in top-line performance.

Operating profit margins, excluding other income, have mirrored this volatility. Margins were positive in FY19 and FY20 but turned negative from FY21 through FY23, reflecting operational challenges. Encouragingly, FY24 and FY25 marked a return to positive operating margins, reaching 8.46% in FY25, signalling improved cost management and operational efficiency.

Profitability and Earnings Analysis

Profit before tax (PBT) and profit after tax (PAT) figures highlight the company's challenging profitability landscape. SEPC posted positive PBT in FY19 and FY20 but suffered significant losses in FY21 and FY22, with PBT plunging to negative ₹220 crores in FY22. This was accompanied by a severe PAT loss exceeding ₹260 crores in the same year. The subsequent years show a recovery trend, with FY24 and FY25 delivering positive PAT of approximately ₹23 crores and ₹25 crores respectively.

Earnings per share (EPS) followed a similar pattern, turning negative during the loss-making years but returning to a positive 0.15 in FY25. The PAT margin also improved from a negative 80% in FY22 to a positive 4.16% in FY25, reflecting a gradual restoration of profitability.

Balance Sheet and Financial Position

SEPC's balance sheet reveals a company managing its capital structure amid operational headwinds. Shareholder's funds increased from ₹1,003 crores in FY21 to ₹1,506 crores in FY25, supported by equity capital raises. Total liabilities have decreased from over ₹1,940 crores in FY21 to just under ₹2,000 crores in FY25, with a notable reduction in short-term borrowings from ₹825 crores in FY22 to ₹94 crores in FY25, indicating improved liquidity management.

Non-current assets have remained relatively stable, while current assets have fluctuated, with total current assets around ₹1,629 crores in FY25. The book value per share adjusted has seen a decline from ₹10.92 in FY20 to ₹8.65 in FY25, reflecting the impact of past losses on net asset value.

Cash Flow and Liquidity Overview

Cash flow statements show persistent challenges in operating cash flows, with negative cash flow from operations in most years except FY23. The company recorded a negative operating cash flow of ₹132 crores in FY25, despite positive profit figures, largely due to working capital changes. Investing activities have been modest, while financing activities have provided inflows, supporting liquidity. Closing cash and cash equivalents stood at ₹7 crores in FY25, down from ₹18 crores in FY24, underscoring tight cash management.

Summary of Historical Performance

SEPC's financial journey over the last seven years has been marked by significant volatility in revenue and profitability, with a peak in sales around FY19 and FY20 followed by a sharp decline and subsequent recovery. Profitability metrics have been under pressure, with losses in FY21 and FY22, but recent years show a return to positive earnings and improved margins. The balance sheet reflects efforts to strengthen equity and reduce short-term debt, while cash flow remains a concern due to working capital demands.

Investors analysing SEPC should consider this historical context of cyclical performance, operational challenges, and recent signs of stabilisation. The company’s ability to sustain growth and profitability in the coming years will be critical to its long-term investment appeal.

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