Sarla Performance Fibers Reports Strong Q4 Profit Growth Amid Rising Debt Concerns

Sarla Performance Fibers, a microcap player in the textile industry, recently announced its financial results for the quarter ending December 2024. The company reported a notable increase in Profit After Tax (PAT), which reached Rs 33.02 crore, reflecting a year-on-year growth of 119.26%. This positive trend in profitability is complemented by the highest quarterly Operating Profit (PBDIT) of Rs 26.05 crore, marking consistent growth over the last five quarters. Additionally, the Profit Before Tax less Other Income (PBT) also reached a peak of Rs 16.94 crore, showcasing a significant increase compared to the average of the previous four quarters.
However, the financial landscape is not without challenges. The interest expense has risen to Rs 2.58 crore, indicating a 22.27% increase quarter-on-quarter, which suggests a rise in borrowings. Furthermore, the company's cash and cash equivalents have dipped to Rs 6.13 crore, the lowest in the last six half-yearly periods, raising concerns about short-term liquidity. The Debt-Equity Ratio has also reached its highest at 0.33 times, indicating a greater reliance on borrowed funds for operations.

In light of these developments, Sarla Performance Fibers has experienced adjustments in its evaluation.

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