IZMO reports significant growth in profitability and sales in latest quarter

IZMO, a microcap IT software company, has recently announced its financial results for the quarter ending September 2024. The company has shown a very positive performance with a score of 27, a significant improvement from -4 in the previous quarter.

One of the key highlights of the financials is the growth in Profit After Tax (PAT) which has increased by 372.5% to Rs 31.98 crore compared to the average PAT of the previous four quarters at Rs 6.77 crore. This indicates a strong upward trend in the company's profitability in the near term.

Another positive aspect is the company's Operating Cash Flow, which has been consistently growing over the last three years and is currently at its highest at Rs 30.54 crore. This shows that IZMO has been able to generate higher cash revenues from its business operations.

The company's Net Sales have also seen a positive trend, with the latest quarter recording the highest sales at Rs 58.55 crore in the last five quarters. The near term sales trend is also positive, with a growth of 21.4% over the average Net Sales of the previous four quarters.

In terms of profitability, IZMO has shown a significant improvement with the latest quarter recording the highest PAT at Rs 31.98 crore in the last five quarters. The Earnings per Share (EPS) have also increased to Rs 21.13, indicating a higher return for shareholders.

On the downside, the company's Non Operating Income is 85.40% of the Profit Before Tax (PBT), which suggests that a significant portion of the company's income is from non-business activities. This may not be a sustainable business model in the long run.

The Debtors Turnover Ratio, which measures the pace of settling debtors, has also slowed down in the last five half yearly periods. However, the company's short term liquidity is improving with the Cash and Cash Equivalents at its highest at Rs 27.61 crore in the last six half yearly periods.

Overall, IZMO has shown a strong financial performance in the latest quarter, with positive trends in key areas such as PAT, Net Sales, and EPS. However, the company needs to address its high non-operating income and slow pace of settling debtors to ensure sustainable growth in the long term. Based on these financials, MarketsMOJO has given a 'Hold' call for IZMO's stock.