IPO Analysis of Konstelec Engineers Limited

What they Do?

Konstelec Engineers Limited Financial Summary

Analysis

1. Assets

Konstelec Engineers Limited has demonstrated consistent growth in its total assets, rising from ₹10,364 lakhs in March 2021 to ₹16,223 lakh as of September 2023. This signifies the company's expanding scale & potentially increased operational capacity.

2. Revenue

The revenue trend shows a notable increase from ₹10,617 lakhs in March 2021 to ₹15,500 lakh in March 2023, reflecting robust top-line growth.

3. Profit After Tax (PAT)

Konstelec Engineers Limited has exhibited a positive trajectory in profitability, with PAT climbing from ₹190 lakhs in March 2021 to ₹778 lakh in March 2023. The company's ability to consistently enhance its net earnings is a positive indicator of operational efficiency & financial health.

4. Net Worth

The net worth of the company has steadily increased from ₹5,071 lakhs in March 2021 to ₹6,648 lakh as of September 2023. This upward trend reflects the company's retained earnings, capital infusion, or a combination of both, contributing to enhanced shareholder value.

5. Total Borrowing

Konstelec Engineers Limited has seen a gradual increase in total borrowing, rising from ₹2,548 lakhs in March 2021 to ₹4,109 lakh as of September 2023. While increased borrowing can support business expansion, it is crucial to monitor the debt-equity ratio to assess the company's leverage & financial risk.

Konstelec Engineers Limited’s Key Performance Indicator

KPI Historical Performance

(Source: DRHP)

Analysis

Revenue from Operations

1. The company witnessed robust revenue growth, reaching ₹15,340.49 lakhs in 2023, a remarkable 43.31% increase YoY. 
2. This substantial growth is indicative of effective sales strategies & market demand.

Gross Profit & Margin

1. The gross profit margin experienced a slight decline from 62.51% in 2022 to 51.77% in 2023. 
2. Despite this, the absolute gross profit increased, suggesting potential cost challenges that need attention for sustained profitability.

EBITDA & Margin

1. EBITDA surged to ₹1,414.54 lakhs in 2023, with an improved margin of 9.22%. 
2. This signifies enhanced operational efficiency & cost management, contributing positively to the company's overall financial performance.

Profit After Tax (PAT) & Margin

1. PAT reached ₹777.77 lakhs in 2023, displaying a notable increase. 
2. The PAT margin also improved to 5.07%, reflecting effective control over operating expenses &  a more profitable bottom line.

Return on Equity (RoE) & Return on Capital Employed (RoCE)

1. Both RoE & RoCE exhibited substantial growth, indicating effective utilization of capital. 
2. RoE rose to 13.39%, & RoCE reached 16.81% in 2023, reflecting improved financial performance & shareholder value creation.

Net Fixed Asset Turnover

1. The Net Fixed Asset Turnover increased to 19.33 times in 2023, indicating efficient utilization of fixed assets to generate revenue. 
2. This suggests improved operational efficiency & effective asset management.

Net Working Capital Days

1. A reduction in Net Working Capital Days from 158 to 135 signifies improved liquidity management. 
2. This could lead to enhanced cash flows & better short-term financial health.

Operating Cash Flows

In conclusion, the negative operating cash flows (-₹457.08 lakhs) in 2023 raise a concern, indicating potential challenges in generating positive cash from core operations. A detailed examination of working capital management is warranted.