Background
Integrated Technologies Ltd, incorporated in 1995, is a manufacturer of printed circuit boards (PCBs). The company utilizes state-of-the-art process technology from FUBA Printed Circuits Gmbh, Germany. As a 100% Export Oriented Unit, it has been producing high-quality single-sided, double-sided, and multilayer PCBs.
Manufacturing Capacity
The company’s production unit, located in New Delhi, boasts an installed capacity of approximately 54,000 Square Meters per annum, broken down as follows:
- Single-Sided: ~14,000 square meters
- Double-Sided: ~25,000 square meters
- Multilayer: ~15,000 square meters
The Bumpy Ride
Despite its robust production capabilities, Integrated Technologies has faced some operational challenges. It remained inoperative for several years, resulting in substantial losses and complete erosion of its net worth. Despite efforts to restructure its PCB manufacturing unit since 2010, the company had to abandon the business due to asset obsolescence.
Financial Health and Performance
The company has managed to clear all its liabilities, save for some unsecured debt outstanding to promoters, which they are reinvesting in the company. This act shows a commitment to the company’s revival.
Key financial indicators include:
- Market Capitalization: ₹ 36.7 Cr.
- Current Stock Price: ₹ 76.8
- Stock P/E: 27.0
- Book Value: ₹ 1.17
- ROCE: 168%
- Debt to Equity Ratio: 1.77
Looking Forward
In FY22, Integrated Technologies only generated Other Income, which comprised of credit balances written back. This fact shows that the company is still in the process of financial recovery.
Despite the current challenges, it is essential to keep an eye on the company’s performance in the coming quarters. Given its history, significant installed capacity, and the reinvestment by promoters, Integrated Technologies Ltd may still hold potential for interested investors.
Quarterly Results Analysis:
Looking at the quarterly results for the last four quarters, we observe the following:
- Sales: The company has shown minimal sales activity. Sales were recorded only in the quarter ending March 2022 (₹0.12 Cr) and March 2023 (₹0.04 Cr). This indicates a weak revenue generation model currently.
- Expenses: There has been a slight increase in expenses in the quarters ending June 2022 (₹0.05 Cr), September 2022 (₹0.04 Cr), and December 2022 (₹0.03 Cr) compared to the previous quarters. This could be attributed to the company’s efforts to revitalize its operations.
- Operating Profit: The company reported a positive operating profit only in the quarters ending March 2022 (₹0.01 Cr) and March 2023 (₹0.01 Cr). This demonstrates the struggling operational efficiency of the company.
- Net Profit: The company posted a significant net profit in the quarter ending September 2022 (₹5.06 Cr), but it was followed by losses in the next two quarters ending December 2022 (₹-0.03 Cr) and March 2023 (₹-3.62 Cr). This suggests instability in the company’s financial performance.
To generate actionable insights, the company must investigate the source of the significant net profit in the September 2022 quarter and try to replicate it. Furthermore, it needs to identify and manage the factors contributing to the losses in the subsequent quarters.
Cashflow:
Analyzing the cash flow for the same period:
- Cash from Operating Activity: The company had a positive cash flow from operating activities in the quarter ending March 2023 (₹5.00 Cr), which is a good sign, indicating that the company’s core business operations are generating cash.
- Cash from Investing Activity: There was a negative cash flow from investing activities in March 2023 (₹-1.07 Cr), showing that the company is investing in its business, possibly for long-term growth.
- Cash from Financing Activity: The company showed a negative cash flow from financing activities in March 2023 (₹-3.91 Cr), suggesting it might have paid off some debt or made dividend payments.
The positive cash flow from operations is a good sign, but the company needs to ensure that this is not a one-time event and continues in the upcoming quarters. The negative cash flow from investing activities could be seen as a positive if these investments lead to increased profits in the future. However, the negative cash flow from financing activities could be a concern if it continues, as it might indicate the company is having trouble raising capital or is paying off too much debt too quickly.
Disclaimer
This article is for informational purposes only and should not be considered financial advice. Investing in the stock market involves risk, and investors should consider their risk tolerance and financial situation before making any investment decisions. While the information provided in this article is based on data available at the time of writing, the performance of any company can fluctuate over time due to a variety of factors, including market conditions, company performance, and economic factors. Therefore, past performance is not indicative of future results.
Before investing in Integrated Technologies Ltd or any other company, it’s recommended to conduct thorough research and, if necessary, consult with a qualified financial advisor. Investing involves the risk of loss, including the loss of principal. Please be aware that Integrated Technologies Ltd has been inoperative for many years, has suffered losses, and its net worth is completely eroded. These factors could significantly impact the company’s future performance and the return on your investment.