Can’t answer on behalf of company, but from going through all their concalls and meetings.
I can try to present their point of view about this is:
- This discrepancy in negative operating cash flow and positive net profit is due to changes in working capital, including inventory buildup, receivables, and other current assets/liabilities.
- The inventory buildup suggests that the company has been increasing stock levels, potentially to meet expected future demand or to fulfill contractual obligations.
- The company is expanding into defense and auto, which will require higher inventory levels to meet the production requirements and future contracts.
- The recent acquisition of the Mercedes-Benz machining unit and capacity expansion from 18,000 TPA to 32,000 TPA suggests a need for increased inventory to support a higher production level, which can temporarily increase working capital requirements.
Given the push into high-growth areas like defense and auto, and the company’s strategy of increasing production capacity, the increased inventory could be strategic — ensuring they can meet future orders without disruptions.
This type of strategic inventory buildup can lead to negative operating cash flows in the short term, but it may position the company well for future revenue generation.
Personal Note: I am swing trader, I entered aroud 320 ( right after break out ) and exited around 750 level.
I still find it’s fundamentals intact, and keeping tabs on it for future entry point, as long as the story is still intact.
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