Primo Chemicals Reports Mixed Financial Results for Q1 FY25

Primo Chemicals, a smallcap company in the chemicals industry, recently announced its financial results for the quarter ending June 2024. The company’s stock has been given a ‘Strong Sell’ rating by MarketsMOJO.

According to the financial report, Primo Chemicals has seen a negative performance in the quarter, with a score of -12. However, this is an improvement from the previous quarter’s score of -27. Despite this, there are some positive aspects to the company’s financials.

One of the strengths of Primo Chemicals is its ability to manage interest payments, with an operating profit to interest ratio of 2.70 times, the highest in the last five quarters. The company has also shown a positive trend in its net sales, with the highest quarterly net sales of Rs 121.93 crore and a growth of 22.9% over the average net sales of the previous four quarters. Additionally, the operating profit margin has also improved to 12.39%, indicating increased efficiency.

However, there are some areas of concern for Primo Chemicals. The company’s profit after tax has fallen by 77.7% compared to the average of the previous four quarters. The interest cost has also increased, indicating a rise in borrowings. The company’s reliance on non-operating income, which is 193.09% of its profit before tax, may not be sustainable in the long run. The company’s short-term liquidity is also deteriorating, with the lowest cash and cash equivalents in the last six half-yearly periods.

Moreover, Primo Chemicals has a high debt-equity ratio of 0.46 times, indicating increased borrowing to fund its operations. This may lead to a stressed liquidity situation for the company. Additionally, the company’s pace of settling its debtors has slowed down, with the lowest debtors turnover ratio in the last five half-yearly periods.

In conclusion, while Primo Chemicals has shown some positive aspects in its financials, there are also some concerns that investors should be aware of. It is important for investors to carefully analyze the company’s financial performance before making any investment decisions.