How has been the historical performance of ZF Commercial?

Revenue and Profit Growth

Over the four-year period ending March 2025, ZF Commercial’s net sales have shown a robust upward trend, increasing from ₹2,543.35 crores in March 2022 to ₹3,830.96 crores in March 2025. This represents a compound annual growth rate (CAGR) of approximately 15.5%, reflecting the company’s ability to expand its market presence and sales volumes steadily.

Operating profit before depreciation, interest, and tax (PBDIT) excluding other income has more than doubled, rising from ₹252.54 crores in March 2022 to ₹631.07 crores in March 2025. When factoring in other income, operating profit reached ₹739.27 crores in the latest fiscal year, up from ₹290.07 crores three years prior. This improvement is also mirrored in the operating profit margin, which expanded from 9.93% to 16.47%, indicating enhanced operational efficiency and cost management.

Profit after tax (PAT) has seen a remarkable increase, climbing from ₹142.07 crores in March 2022 to ₹460.73 crores in March 2025. The PAT margin has more than doubled, rising from 5.59% to 12.03%, underscoring the company’s growing profitability and effective tax management. Earnings per share (EPS) have followed a similar trajectory, increasing from ₹74.93 to ₹243.00 over the same period, signalling strong value creation for shareholders.

Cost Structure and Margins

The company’s cost of raw materials has fluctuated but remained a significant portion of total expenditure, rising from ₹1,649.34 crores in March 2022 to ₹2,229.52 crores in March 2025. Despite this, total expenditure excluding depreciation has been managed effectively, with a slight decrease from ₹3,249.22 crores in March 2024 to ₹3,199.89 crores in March 2025, even as revenues increased. Employee costs have also risen steadily, reflecting investment in human capital, from ₹328.69 crores in March 2022 to ₹539.53 crores in March 2025.

Gross profit margin has improved significantly, from 11.33% in March 2022 to 19.15% in March 2025, highlighting better pricing power and cost control. Interest expenses have remained low and stable, supporting the company’s strong earnings growth without significant financial leverage.

Balance Sheet Strength and Asset Quality

ZF Commercial’s balance sheet has strengthened considerably, with shareholder’s funds increasing from ₹2,114.08 crores in March 2022 to ₹3,214.54 crores in March 2025. The company maintains a debt-free status throughout the period, with no long-term or short-term borrowings reported, which enhances financial stability and reduces risk.

Total assets have grown from ₹2,618.21 crores to ₹3,760.25 crores, supported by investments in fixed assets and working capital. Net block of assets increased from ₹450.36 crores to ₹596.20 crores, while capital work in progress also rose, indicating ongoing expansion and capacity enhancement. Current assets have expanded from ₹1,955.68 crores to ₹2,841.66 crores, driven by increases in sundry debtors and cash balances, reflecting healthy liquidity and operational cash flow management.

Cash Flow and Liquidity

Cash flow from operating activities has shown a positive trend, increasing from ₹138 crores in March 2022 to ₹286 crores in March 2025. Despite fluctuations in cash flow after changes in working capital, the company has maintained a positive net cash inflow in the latest fiscal year. Investing activities have consistently involved cash outflows, reflecting capital expenditure and investments, while financing activities have seen modest outflows, likely related to dividend payments or other shareholder returns.

Closing cash and cash equivalents have nearly doubled from ₹89 crores in March 2022 to ₹129 crores in March 2025, reinforcing the company’s strong liquidity position. The absence of debt and growing reserves, which increased from ₹2,104.59 crores to ₹3,205.06 crores, further underpin the company’s financial resilience.

Summary

In summary, ZF Commercial’s historical performance over the past four years reflects a company on a steady growth path, characterised by rising revenues, expanding profit margins, and a robust balance sheet free of debt. The company’s ability to enhance operational efficiency, maintain strong cash flows, and invest in growth initiatives positions it favourably within its sector. Investors may find the consistent improvement in earnings per share and book value per share particularly encouraging, signalling sustained value creation.

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