Key Highlights:

• Revenue surges from INR 246 Cr in FY22 to INR 316 Cr in FY23.
• Sharp decline in profits from INR 4 Cr to INR 1.8 Cr.
• Capital Expenditure (CapEx) of approximately INR 17 Cr.
• Accumulated debts due to CapEx fulfilment and negative cash generated from operations.
• Current unlisted share price at INR 325, P/E ratio at 62x.

  Particulars (in Crores)	2023	2022
  Revenue From Operations	316	242
  Cost of Material Consumed	118	86
  Change in Inventories	-6	-8
  Manufacturing Expenses	127	100
  Employees Benefit Expenses	51	47
  Other Expenses	17	12
  EBITDA	9	5
  OPM	2.85%	2.07%
  Other Income	5	6
  Depreciation	9	9
  Finance Cost	2	0
  PBT	3	2
  Exceptional Items	0	3
  Tax	1	1
  PAT	2	4
  NPM	0.62%	1.61%
  Shares	0.35	0.35
  EPS	5.71	11.43

The latest financial report for Anugraha Valve for the fiscal year 2022-23 has been released, reflecting a tale of two distinct financial paths. On one hand, the company’s revenue paints a picture of growth, while on the other, its profit margins reveal a dwindling trend.

Revenue and Growth:

Anugraha Valve Unlisted Share has reported an impressive rise in its revenue, which climbed from INR 246 Cr in FY22 to INR 316 Cr in FY23. This indicates a Compound Annual Growth Rate (CAGR) of approximately 28.5%. However, the raw material cost is still high affecting the Gross Margins.

Profit Margins:

However, the company has experienced a significant drop in profits, which dwindled from INR 4 Cr in FY22 to INR 1.8 Cr in FY23. Two main factors contribute to this decline.

a) Capital Expenditure:

Firstly, Anugraha Valve has invested nearly INR 17 Cr in capital expenditure this year. This investment has affected the cash reserves, as the company failed to generate enough cash from its operations due to high inventory and receivables amounting to ~INR 40 Cr. To meet its CapEx requirements, the company had to take out loans amounting to ~INR 26 Cr, both short-term and long-term, thereby increasing its finance cost by approximately INR 2 Cr.

b) Dues Woes:

Secondly, the company's client in Germany, Phonix ArmaturenWerke Bregel GmbH, has filed for bankruptcy. Anugraha Valve had dues of around INR 13.67 Cr from that company, of which a 20% loss amounts to INR 2.7 Cr is booked this year. Combining these factors, the company incurred an extra expense of ~INR 4.7 Cr this fiscal year.

Valuation and Risks:

The Earnings Per Share (EPS) for the year stands at INR 5.19. The shares are currently available in the unlisted market at around INR 325 per share. This leads to a Price to Earnings (P/E) ratio of 62x, which suggests that the shares are highly overvalued. Investors must also be cautious about the overhang of bad debt provision, which will continue to loom until the bankruptcy proceedings of the German client are concluded.

Conclusion:

While the revenue growth for Anugraha Valve looks promising, the decline in profits due to filing of bankruptcy by German Client raises several red flags and potential loss of revenue. The high P/E ratio also points towards overvaluation. Investors must exercise caution and consider these variables before making any investment decisions.

Disclaimer: This article is for informational purposes and should not be considered as financial advice.