Key Risks/Concerns
- FY23 sales were 50Cr. Management has a really ambitious plan of reaching 1000 Cr in 7 years. At full capacity the company can make 65-70 Cr. Therefore, the management would have to put up significant capex in the coming years to meet its target of 1000 cr. topline.
- The bathroom faucets and allied items business segment is expected to make 100 cr. at full capacity. Management’s ability to scale up this segment is a key variable to watch going forward.
- Receivables have become 3.5 times the previous year. Post a short recovery receivable days and receivables as a % of sales have increased.
- CFO has become negative while sales, receivables & inventory have increased significantly.
- Cumulative 10Yr CFO is also less than cumulative 10Yr PAT.
- Deteriorating CFO/EBITDA in the past 3 years, indicate the company is not able to translate its profits into cash profits.
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