How has been the historical performance of Shah Alloys?

Revenue and Profitability Trends

Shah Alloys’ net sales demonstrated considerable variability, peaking in the fiscal year ending March 2022 with ₹886.15 crores before sharply declining to ₹267.28 crores in March 2025. This steep drop in sales over the last three years reflects challenging market conditions or operational disruptions. Correspondingly, total operating income mirrored this pattern, with no other operating income reported during the period.

Operating profit margins have been inconsistent, with a notable high of 13.96% in March 2022, contrasting with negative margins in recent years, including -3.55% in March 2025. The gross profit margin followed a similar trajectory, reaching 16.07% in 2022 but falling to -5.23% by 2025. These figures indicate that the company struggled to maintain profitability amid rising costs and declining sales.

Profit after tax (PAT) margins also fluctuated significantly, with a peak of 11.69% in 2022, but negative margins in most other years, including -6.54% in the latest fiscal year. The consolidated net profit reflected this volatility, swinging from a profit of ₹82.11 crores in 2022 to losses exceeding ₹19 crores in 2025. Earnings per share (EPS) followed suit, with a high of ₹41.47 in 2022 and a negative ₹9.96 in 2025, underscoring the company’s recent financial strain.

Cost Structure and Expenditure

The company’s cost of raw materials has been a significant component of total expenditure, scaling down from ₹613.70 crores in 2022 to ₹147.21 crores in 2025, in line with the reduced sales volume. Other expenses such as power costs and manufacturing expenses have also decreased but remain substantial relative to revenue, contributing to the negative operating profits in recent years.

Employee costs have remained relatively stable, averaging around ₹20 crores annually, while other expenses have declined from over ₹21 crores in 2022 to under ₹7 crores in 2025. Despite these cost reductions, total expenditure excluding depreciation still exceeded operating income in the latest fiscal year, resulting in operating losses.

Balance Sheet and Financial Position

Shah Alloys’ balance sheet reveals a weakening financial position. Shareholder’s funds turned negative in 2025 at approximately -₹7.69 crores, a sharp decline from a positive ₹33.07 crores in 2022. This deterioration reflects accumulated losses and negative reserves, which stood at -₹27.49 crores in 2025.

Total liabilities have decreased from ₹250.69 crores in 2022 to ₹116.69 crores in 2025, primarily due to reductions in long-term borrowings, which fell from ₹12.94 crores to ₹3.68 crores. However, short-term borrowings remain elevated at ₹75.24 crores, indicating ongoing reliance on short-term debt financing. The company’s net block of fixed assets has also declined steadily, suggesting asset depreciation or disposals.

Cash Flow and Liquidity

Cash flow from operating activities has been under pressure, turning negative in the last two fiscal years with outflows of ₹4 crores in 2025 and ₹6 crores in 2024, compared to positive inflows in earlier years. Investing activities have contributed marginally positive cash flows recently, while financing activities have shown a modest inflow in 2025, possibly reflecting new borrowings or capital injections.

Overall, the company’s cash and cash equivalents remain low, with ₹2 crores reported at the end of March 2025, highlighting tight liquidity conditions. The net current assets position remains negative, indicating working capital challenges.

Summary and Outlook

In summary, Shah Alloys has faced a challenging period marked by declining revenues, fluctuating profitability, and a weakening balance sheet. The fiscal year 2022 stands out as an exceptional year with strong sales and profits, but subsequent years have seen a sharp reversal. The company’s ability to manage costs and improve operational efficiency will be critical to reversing recent losses and restoring financial health.

Investors should closely monitor the company’s efforts to stabilise its revenue streams, reduce debt levels, and enhance cash flow generation. Given the current financial strain, Shah Alloys may require strategic initiatives or market recovery to regain its footing in the competitive metals sector.

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