Nila Infrastructures Faces Challenges Despite Strong Profit Growth and High Debt Levels

Nila Infrastructures, a microcap player in the construction and real estate sector, has seen significant activity today, hitting a new 52-week low of Rs. 8.21. This decline comes after a six-day streak of losses, although the stock has managed to outperform its sector by 1.98% today.
Despite the recent downturn, Nila Infrastructures reported a remarkable 91.97% growth in net profit for the December 2024 quarter, marking eight consecutive quarters of positive results. The company’s return on capital employed (ROCE) stands at a robust 17.31%, indicating efficient use of capital. However, the long-term outlook remains challenging, with a -10.04% compound annual growth rate (CAGR) in operating profits over the past five years and a high debt-to-EBITDA ratio of 11.48 times, suggesting difficulties in servicing debt.

Institutional investor participation has also waned, with a 0.76% decrease in stakes over the last quarter. Overall, Nila Infrastructures has underperformed the broader market, with a one-year return of -36.15%, contrasting sharply with the Sensex's -1.42% performance during the same period.