Sheela Foam's Q2 financials show mixed performance, with concerns over profitability and liquidity.

Sheela Foam, a midcap company in the consumer durables industry, recently announced its financial results for the quarter ending September 2024. The company's stock has been given a 'Strong Sell' call by MarketsMOJO.

According to the financials, Sheela Foam has seen a negative performance in the second quarter of the fiscal year 2024-2025, with a score of -13 compared to -27 in the previous quarter. However, there are some positive aspects to the company's financials.

One of the key strengths of Sheela Foam is its operating cash flow, which has been consistently growing over the past three years and was at its highest at Rs 405.95 crore annually. The company has also shown a positive trend in its net sales, which grew by 32.54% year on year in the last quarter.

On the other hand, there are some areas of concern for Sheela Foam. The company's interest cost has increased by 100.50% in the last nine months, indicating a rise in borrowings. The profit before tax (PBT) has also seen a significant decline of -119.21% year on year, and the profit after tax (PAT) has fallen by -77.7% year on year. This negative trend in profitability is reflected in the company's earnings per share (EPS), which is at its lowest in the last five quarters.

Another concerning aspect is the high non-operating income, which is 127.58% of the PBT. This suggests that the company's income from non-business activities is high, which may not be a sustainable business model.

In addition, Sheela Foam's short-term liquidity has deteriorated, with its cash and cash equivalents at its lowest in the last six half-yearly periods.

Overall, the financial results for the quarter ending September 2024 show a mixed performance for Sheela Foam. While there are some positive aspects, such as the strong operating cash flow and growing net sales, the company also faces challenges in terms of declining profitability and short-term liquidity. Investors may want to carefully consider these factors before making any investment decisions.