Teerth Gopicon Ltd: Annual Report 2023-24 Analysis

Executive Summary #

Comprehensive Performance Overview #

1. 3-Year Trend Analysis of Key Financial Metrics

The provided document does not contain a complete three-year history to complete the required analysis. The financial data is shown below.

Ratios:

Without industry averages, conclusions are limited to internal trends. Key observations from the limited data:

• Significant Growth: Revenue has increased substantially.
• Improved Profitability: Net Profit has increased significantly, as indicated by the increase in Net Profit ratio.
• Stronger Liquidity: The Current Ratio is above 1 for both years. The increase is likely due to a decrease in current liabilities
• Decreased Leverage: The Debt-Equity Ratio has decreased, indicating lower reliance on debt financing.

2. Business Segment Performance

The company operates in only one segment.

3. Major Strategic Initiatives and Their Progress

• Initial Public Offering (IPO): Successfully listed on the NSE Emerge platform.

• Company is planning to enter into the Renewable Energy Projects & Hybrid Energy sector Projects.

4. Risk Landscape Changes

The document doesn’t explicitly show changes in Risk.

5. ESG Initiatives and Metrics

The provided document does not contain sufficient ESG-related information.

6. Management Outlook

• The company plans to enter into Renewable energy sector.
• The management indicates a belief in the company’s competitive advantages and ability to capitalize on future market opportunities.
• The company shows the following figures as the outlook of its performance.

Detailed Analysis #

Financial Position #

Balance Sheet Analysis #

1. Three-Year Comparative Balance Sheet Analysis #

(Rs. In Lakhs)

2. Significant Changes in Major Line Items (>10% YoY) #

3. Working Capital Trends #

4. Asset Quality Metrics #

5. Debt Structure and Maturity Profile #

The provided balance sheet only shows “Long-Term Borrowings” and “Short-Term Borrowings.” A detailed maturity profile is unavailable in the given data. Further information, including specific loan terms, interest rates, and repayment schedules, would be needed for a full analysis.

6. Off-Balance Sheet Items #

No off-balance sheet items are disclosed from the provided information. A full assessment would require reviewing the complete notes to the financial statements.

Operating Performance #

Income Statement Deep Dive #

Here is the analysis:

Revenue Breakdown and Growth Rate

The provided document contains only total revenue, not a breakdown by segment or geography.

• FY 2024 Revenue: Rs. 10,510 Lakhs
• FY 2023 Revenue: Rs. 3,915 Lakhs
• Growth Rate : 168%

Cost Structure Analysis

Margin Analysis

Operating Leverage

The document does not contain sufficient information to perform a detailed operating leverage analysis.

Non-recurring Items

• No non-recurring items are explicitly mentioned in the provided information.

GAAP vs. Non-GAAP Reconciliation

• The provided information doesn’t contain any non-GAAP measures.

Earnings Per Share

Peer Comparison No peer comparison details in the given document.

Cash Management #

Cash Flow and Liquidity Analysis #

Cash Flow Analysis: Teerth Gopicon Limited (FY2023-24)

(All figures in INR Lakhs unless otherwise specified)

1. Cash Flow Components (FY23-24 vs. FY22-23)

2. Working Capital Management Efficiency

Requires additional data (e.g., Cost of Goods Sold, breakdown of current assets and liabilities) for calculating specific ratios like:

• Inventory Turnover Ratio
• Receivables Turnover Ratio/Days Sales Outstanding (DSO)
• Payables Turnover Ratio/Days Payables Outstanding (DPO)
• Cash Conversion Cycle

3. Capital Expenditure Analysis Based on the provided data, it is not possible to differentiate it by segment. Further details needed.

4. Dividend and Share Buyback Trends Dividend not declared or paid. No information available on share buybacks based on the provided data.

5. Debt Service Coverage Ratio It is not possible to calculate Debt Service Coverage Ratio from the available data. The statement does not contain sufficient information to calculate this ratio.

6. Liquidity Position and Cash Conversion Cycle

• Current Ratio (FY23-24): 2.05. The company possesses a good liquidity postion.
• Current Ratio (FY22-23): 1.39.
• Cash Conversion Cycle: Not calculable without further data on the cost of material consumption, inventory, trade receivables and payables.

Operational Metrics #

Key Performance Indicators #

1. Profitability Ratios

2. Liquidity Ratios

3. Efficiency Ratios (Asset Utilization Ratios)

4. Leverage Metrics

5. Segment-wise ROIC Not Applicable - only one segment

6. Working Capital Ratios Not enough data to calculate accurately.

Business Segments #

Segment Performance Analysis #

Revenue and Profitability Metrics with Growth Rates

• FY2024 Revenue from Operations: ₹ 10,492 Lakhs
• FY2023 Revenue from Operations: ₹ 3,908 Lakhs
• Revenue Growth Rate: 168.49%
• FY2024 Profit Before Interest, Depreciation, and Tax: ₹ 1,605 Lakhs
• FY2023 Profit Before Interest, Depreciation, and Tax: ₹ 239 Lakhs
• FY2024 Profit After Tax (PAT): ₹ 1,156 Lakhs
• FY2023 Profit After Tax (PAT): ₹ 170 Lakhs
• FY2024 Basic Earnings Per Share (EPS): ₹ 18.49
• FY2023 Basic Earnings Per Share (EPS): ₹ 3.41
• FY2024 Diluted Earnings Per Share (EPS): ₹ 18.49
• FY2023 Diluted Earnings Per Share (EPS): ₹ 3.41

Key Products/Services Performance

• The company specializes in engineering construction and development, focusing on roads, sewerage, and water distribution projects.
• Successfully executed projects: Building Construction Work, Water Supply and Sewerage Network, Water Treatment Plant, Sewerage Treatment Plant, Reuse Network, Overhead Tanks, GSR, Road Work, River Front Development etc. *Provides comprehensive EPC services. *Company is planning to enter into the Renewable Energy Projects/Hybrid Energy Sector Projects.

Geographic Distribution and Market Penetration

• Primary operations focused on Madhya Pradesh.
• The company intends to expand its geographical footprint to other states.

Growth Initiatives and Challenges

• Growth Initiatives:
  • Expansion into new geographic regions.
  • Potential entry into Renewable Energy Projects/Hybrid Energy Sector.
• Challenges: The document mentions various challenges, including global economic and political uncertainties, interest rate fluctuations, and regulatory changes.

Financial Ratio Analysis

The company’s performance for FY2024, the information regarding the company’s profitability and operating performance is the following:

• Net Profit Ratio: 1,156 (Profit after tax) / 10,510 (Revenue from Operation) = 11%
• Return on Capital Employed (ROCE): 1,605 (EBIT) / (500 Equity Share Capital + 320 Reserve & Surplus)= 195%
• Debt Equity Ratio: 574 / (800+1,182)= 0,28
• Current Ratio: (5885+3338+105+391+29)/8119= 1.15
• Debt service coverage ratio: 806.22/464.55 = 1.74
• Return on Equity ratio 1156/(6250+1185)=15.5%
• Inventory Turnover Ratio: 8905/316 = 28.18
• Trade Receivables Turnover Ratio: 10510/1761 = 5.97
• Trade Payable Turnover Ratio 8905/590 = 15.09
• Net Capital Turnover Ratio: 10510/832 = 12.63
• Net Profit ratio: 1156 / 10492= 11%
• Gross Profit Margin: 1605/10510 = 15.27 %

Observations:

• High Growth: The company’s revenue and profit after tax have increased significantly, indicating strong growth. The EPS has also improved.
• Material Reliance on one geographic area The vast majority of the company’s order book is derived from projects within Madhya Pradesh.
• High ROIC The company’s high Return on Invested Capital(ROIC) is driven by good revenues and operating profits.

Strategic Direction #

Strategic and Management Analysis #

1) Long-Term Strategic Goals and Progress

• Stated Goals: Specialization in engineering construction and development, focusing on roads, sewerage, and water distribution projects, primarily in Madhya Pradesh. Geographic expansion to other states. Entry into Renewable and Hybrid Energy sector.
• Progress Indicators: Successful IPO and listing on NSE Emerge. Amendment of Object Clause to include renewable energy initiatives.

2) Competitive Advantages and Market Positioning

• Competitive Advantages: Registered Civil Contractor for various Central/State Government departments. ISO 9001:2015 certification. In-house project management, engineering, design, and procurement.
• Market Positioning: Focus on Madhya Pradesh. Expanding operations.

3) Innovation Initiatives and R&D Effectiveness

• No specific information is mentioned.

4) M&A Strategy and Execution

• No specific information is mentionned

5) Management’s Track Record in Execution

• Positive indicators include successfully completing a range of projects. A track record of growth.
• Managing Director and Whole-Time Director have extensive experience.

6) Capital Allocation Strategy

• IPO proceeds allocated to funding working capital requirements and general corporate purposes.
• Authorized Share Capital increase from Rs. 12 Crores to Rs. 50 Crores.
• Bonus Shares issued in the proportion of 6 equity shares for every 10.

7) Organizational Changes and Their Impact

• Appointments of Managing Director, Whole-Time Director, Chief Financial Officer, and Company Secretary, with effect from various dates (October 2023, and December 2023).
• No data provided to access the impact.

KPI Tracking Against Strategic Objectives

Industry Trend Analysis

• The Indian construction industry is one of the fastest-growing globally.
• The Indian government is making considerable investments in infrastructure development.
• India is now a large market for infrastructure.

ESG Framework #

ESG and Sustainability Analysis #

1) Environmental Metrics and Targets

The document does not provide any specific, quantifiable environmental metrics or targets. The stated intention to enter the Renewable Energy and Hybrid Energy sector indicates a potential future focus on environmental aspects. The company holds ISO 14001:2015 certification for Environmental Management Systems.

2) Social Responsibility Programs

No specific social responsibility programs or metrics are detailed. There is a brief, generic mention of “enriching the well-being of the communities we serve” and making a “positive impact on society.” There’s also a reference for employees.

3) Governance Structure and Effectiveness

• Board Composition:
  • Managing Director: Maheshbhai M. Kumbhani
  • Whole Time Director: Chandrikaben M. Kumbhani
  • Non-Executive, Independent Director: Bhavan Trivedi
  • Non-Executive, Independent Director: Rajnibhai Vekariya
  • Non-Executive, Non-Independent Director: Pallavy Kumbhani
• Board Committees: Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, and CSR Committee, though compositions and meeting frequencies are not all fully detailed.
• Related Party Transactions: Compliance with Section 188 of the Companies Act, 2013.
• Whistle-Blower Policy: A Vigil Mechanism/Whistle-Blower Policy is in place.
• Director Independence: Two independent directors provided declarations of independence.

5) ESG Ratings and Peer Comparison

• No ESG ratings are mentioned.
• No peer comparison is provided.

6) Regulatory Compliance and Future Preparations

• Compliance with Companies Act, 2013 (multiple sections cited).
• Compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• Compliance with SEBI Circulars.
• ISO 14001:2015.
• ISO 45001:2018
• Maintenance of cost records not required, based on applicability criteria.
• Mention of a requirement for a Statement as required under Section 102(1) of the Companies Act, 2013.
• Future focus on “Building india’s bright future.”

Important Note: This analysis highlights a lack of quantitative information. The document does not provide the data required for any kind of progress measurement.

Forward Outlook #

Future Projections and Guidance #

1) Management Guidance and Assumptions

• Assumes continued strong performance based on past success and entry into the public domain.
• Expects positive impact of its listing on NSE Emerge.
• Believes shareholders are “Trust Holders,” motivating growth and value creation.
• Focuses on contributing to national growth and development.
• Aims to be a dynamic force in the industry, creating value and positive societal impact.
• States a commitment to engineering excellence and crafting India’s infrastructure.
• Plans to enter into Renewable Energy Projects and Hybrid Energy Sector Projects.

2) Market Growth Forecasts

• Cites India as one of the fastest-growing economies globally.
• References expectations for continued, robust economic activity in India.
• Indicates belief that the infrastructure sector is a key driver for the Indian economy.
• Foresees high-growth opportunities in the Indian infrastructure sector.

3) Planned Strategic Initiatives

• Amendment of the Object Clause to encompass renewable energy initiatives.
• Strategic alteration marking a pivotal moment in corporate evolution.
• Leveraging the latest technology and best practices to deliver high-quality services.
• Ensuring safety, sustainability and social responsibility.
• Building on past successes to work towards a prosperous future for the company.

4) Capital Expenditure Plans

• No explicit capital expenditure plans are detailed beyond the general intent to build infrastructure.
• Mentions borrowing and use of funds for business objectives, up to a limit of INR 900 Crores, in a resolution.

5) Efficiency Improvement Targets

• Focus on timely completion of projects with the highest standards of quality.
• Promotion of a culture of collaboration and inclusion.
• Leveraging the latest technology and best practices to create value and satisfaction for clients.
• Plan to participate in construction work for various government works.
• Plan activities to achieve consistent quality.
• Execution of activities as per planning, Quality, and Safety Checks.

6) Potential Challenges and Opportunities

• Challenges: Global economic, political, and social conditions are noted as potential threats. Specific risks include interest rate fluctuations, regulatory changes, competition, and material price increases. Natural disasters and civil disturbances are also mentioned.
• Opportunities: Increased investment in infrastructure by central and state governments. Expansion into new markets.

Audit & Compliance #

Audit and Regulatory Analysis #

Here’s a review of the provided documents, formatted and presented as requested:

1. Auditor’s Opinion and Qualifications

The Independent Auditor’s Report contains an unmodified (unqualified) opinion. No qualifications, reservations, or adverse remarks were expressed regarding the financial statements.

2. Key Accounting Policies and Changes

The company’s accounting policies appear consistent with Indian Accounting Standards (Ind AS). No specific changes in accounting policies were disclosed, implying consistency with the prior year. The provided document lacks full notes.

3. Internal Control Effectiveness

The management asserts responsibility for establishing and maintaining adequate internal financial controls. The auditor’s report contains no statement.

4. Regulatory Compliance Status

The company has stated compliance with Secretarial Standards. No specific non-compliance with any regulations are mentioned.

5. Legal Proceedings and Their Potential Impact

The documents did not indicate the need of details related to any pending litigations.

6. Related Party Transactions

• Transactions: Remuneration was paid to the Managing Director and Whole-Time Director.
• Balances: No amounts reported as outstanding or as provisions for doubtful debts concerning related parties.

7. Subsequent Events

• Authorized Capital Increase: Approved increase from ₹12 Crores to ₹50 Crores.
• Bonus Issue: Allotment of 2,20,00,000 equity shares on October 27, 2023.
• The IPO of the company have been oversubscribed.

Analysis of Accounting Quality and Regulatory Risk Assessment Without full notes, its hard to give quality conclusion. Based on the available information only.

• Accounting Quality:
  • The unqualified audit opinion suggests a generally acceptable level of accounting quality.
  • The statement that financial statements present a true and fair view is consistent with generally accepted accounting principles.
  • Compliance with Ind AS is stated.
• Regulatory Risk:
  • Stated compliance with the Companies Act, 2013, and SEBI Listing Regulations lowers regulatory risk.
  • No reported issues regarding payment of statutory dues.
  • No reported instances of fraud.
  • Absence of details regarding “going concern” assumption is a significant missing element.
  • The increase in share capital, change in objectives to include renweable and hybrid energy, and IPO are significant events that warrant careful scrutiny of disclosures.
  • Lack of comment on internal controls may pose risk.