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Analysing small cap companies with significant net block increase and debt reduction

20 June 20245 mins read by Angel One
This article examines the financial performance of small cap companies that have witnessed substantial growth in net block while concurrently reducing their debt burden
Analysing small cap companies with significant net block increase and debt reduction
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Companies with Significant Net Block Increase

Name CMP (Rs) Market Cap

(Rs crore)

Net block (Rs crore) Net block 3Years back (Rs crore) Net block increase (%) Debt

(Rs crore)

Debt 3Years back

(Rs crore)

Debt reduction (%)
Ideaforge Tech 685 2937.65 114.43 0 14.49 65.2 -77.78%
GKW 2400 1432.81 2556.57 16 15878.56% 0.03 0.13 -76.92%
Newtime Infra. 17.68 927.95 6.78 0.06 11200.00% 47.85 270 -82.28%
Swadeshi Polytex 156.2 609.18 4.97 0.07 7000.00% 0 1.79 -100.00%
Peninsula Land 63.97 1974.8 308.05 22.73 1255.26% 306.65 1081.42 -71.64%

Among the companies analysed, Ideaforge Tech, GKW, Newtime Infra., Swadeshi Polytex, and Peninsula Land have demonstrated remarkable increases in net block over the past three years. Notably, GKW witnessed an astronomical increase of 15,878.56%, followed by Newtime Infra. with 11,200.00%, Swadeshi Polytex with 7,000.00%, and Peninsula Land with 1,255.26%. These substantial increments underscore significant investments in fixed assets, reflecting growth and expansion strategies undertaken by these companies.

Simultaneous Debt Reduction

Despite the significant increase in net block, these companies have managed to reduce their debt significantly. Newtime Infra. leads the pack with a remarkable reduction of 82.28%, followed by Swadeshi Polytex with 100.00%, GKW with 76.92%, and Peninsula Land with 71.64%. This prudent debt management indicates a focus on improving financial stability and reducing financial risk, which is crucial for sustainable growth in the long term.

Return Ratios

Name Return over 1year (%) Return on assets (%) Return on equity(%) Return on capital employed (%)
Ideaforge Tech -47.31 7.76 9.69 12.36
GKW 262.15 0.48 0.61 0.84
Newtime Infra. 327.94 0.66 7.91 1.97
Swadeshi Polytex 284.29 93.04 122.08 146.6
Peninsula Land 155.26 8.25 70.53 26.56

Analysing the return ratios provides insights into the companies’ operational efficiency and profitability. Despite variations across companies, Four out of five companies have demonstrated robust returns over the past year. Swadeshi Polytex stands out with an impressive return of 284.29%, followed by Newtime Infra. with 327.94%, GKW with 262.15%, Peninsula Land with 155.26%. These returns reflect the successful execution of growth strategies and efficient utilisation of resources by these companies.

Ideaforge Tech presents a contrasting case. Despite having no net block three years ago, the company has a negative return on equity of -47.31%. This is likely due to factors common in high-growth ploacompanies like expenses or significant investments in marketing and customer acquisition. These investments are crucial for future growth but may not translate into immediate profits.

Conclusion

Despite substantial investments in fixed assets, these companies have effectively managed their debt, indicating prudent financial management practices. Thus, analysing net block growth, debt reduction, and return ratios provides valuable insights into a company’s approach to growth and its overall financial health.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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