Poly Medicure Ltd Reports Declining Margins Despite Record Quarterly Sales

Record Sales Contrasted by Profitability Pressures

In the quarter ended December 2025, Poly Medicure achieved its highest-ever net sales figure of ₹493.66 crores, marking a significant milestone in its revenue trajectory. However, this top-line growth did not translate into improved bottom-line results. The company’s profit after tax (PAT) declined by 11.0% to ₹75.86 crores, reflecting margin pressures and cost escalations that offset revenue gains.

The operating profit to net sales ratio also deteriorated sharply, hitting a quarterly low of 22.52%. This contraction in operating margin indicates rising expenses or pricing pressures that have eroded the company’s core profitability. Furthermore, profit before tax excluding other income (PBT less OI) fell to ₹78.15 crores, the lowest level recorded in recent quarters, underscoring the weakening earnings quality.

Financial Trend Shifts from Flat to Negative

Poly Medicure’s financial trend score, which had remained flat in the previous quarter, has now turned negative with a score of -8 over the last three months. This shift highlights a deterioration in key financial parameters, signalling caution for investors and analysts alike. The company’s earnings per share (EPS) also declined to ₹7.00, the lowest quarterly EPS in recent history, further emphasising the earnings pressure.

Another area of concern is the debtors turnover ratio, which dropped to 4.02 times for the half-year period, the lowest in recent times. This suggests a slowdown in collections and potential liquidity challenges, which could impact working capital management going forward.

Stock Performance and Market Context

Poly Medicure’s stock price closed at ₹1,499.80 on 6 February 2026, down 1.20% from the previous close of ₹1,517.95. The stock has been underperforming relative to the broader market, with a one-month return of -12.98% compared to the Sensex’s -2.49%. Year-to-date, the stock has declined 15.54%, significantly lagging the Sensex’s modest 2.24% gain. Over the past year, the stock has suffered a steep 39.31% loss, while the Sensex gained 6.44% in the same period.

Despite these recent setbacks, Poly Medicure’s longer-term performance remains robust, with a three-year return of 73.98% and a five-year return of 170.14%, both outperforming the Sensex’s respective 36.94% and 64.22% gains. Over a decade, the stock has delivered an impressive 847.74% return, far exceeding the Sensex’s 238.44% growth, reflecting the company’s strong historical growth trajectory.

Mojo Score and Rating Downgrade

Reflecting the recent financial deterioration, Poly Medicure’s Mojo Score has declined to 28.0, accompanied by a downgrade in its Mojo Grade from Sell to Strong Sell as of 28 May 2025. This rating adjustment signals heightened caution from market analysts, highlighting concerns over the company’s weakening profitability and operational metrics.

The company’s market capitalisation grade remains modest at 3, indicating a mid-tier market cap relative to its peers in the healthcare services sector. The downgrade in rating and score underscores the need for investors to reassess the risk-reward profile of Poly Medicure amid evolving financial headwinds.

Operational Efficiency and Working Capital Challenges

Poly Medicure’s declining debtors turnover ratio to 4.02 times in the half-year period is a notable red flag. This metric, which measures how efficiently the company collects receivables, suggests a slowdown in cash inflows from customers. Such a trend can strain liquidity and increase reliance on external financing, potentially raising interest costs and impacting net profitability.

Additionally, the contraction in operating profit margins to 22.52% from previous quarters indicates rising cost pressures or pricing challenges in a competitive healthcare services environment. These factors combined have contributed to the negative financial trend and the downgrade in the company’s outlook.

Comparative Sector and Market Performance

Within the healthcare services sector, Poly Medicure’s recent performance contrasts with some peers who have managed to sustain margin expansion despite inflationary pressures. The company’s negative financial trend and margin contraction place it at a disadvantage relative to sector benchmarks, which have generally maintained stable operating margins in the last quarter.

Against the broader market, Poly Medicure’s underperformance is stark. While the Sensex has delivered modest gains year-to-date and over the past year, the stock’s double-digit declines highlight company-specific challenges that have weighed on investor sentiment.

Outlook and Investor Considerations

Poly Medicure’s recent quarterly results highlight a critical juncture for the company. While the record net sales demonstrate strong market demand and growth potential, the simultaneous decline in profitability and operational efficiency raises concerns about sustainability. Investors should closely monitor the company’s ability to manage costs, improve working capital cycles, and restore margin expansion in upcoming quarters.

Given the downgrade to a Strong Sell rating and the negative financial trend, cautious investors may consider rebalancing their portfolios or exploring alternative healthcare stocks with more stable earnings profiles. However, the company’s impressive long-term returns over five and ten years suggest that any recovery in margins could unlock significant upside potential.

Market participants should also watch for management commentary on strategies to address margin pressures and improve cash flow metrics in future earnings calls and disclosures.

Summary

In summary, Poly Medicure Ltd’s December 2025 quarter was characterised by record sales growth overshadowed by declining profitability and operational challenges. The shift from a flat to a negative financial trend, coupled with a downgrade to Strong Sell, signals caution for investors. While the company’s long-term growth story remains intact, near-term risks related to margin contraction and working capital inefficiencies warrant careful analysis.

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