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Mid-caps stocks, like Page Industries Limited (NSEI:PAGEIND) with a market capitalization of ₹253.02B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. This article will examine PAGEIND’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into PAGEIND here. See our latest analysis for Page Industries
Does PAGEIND generate enough cash through operations?
PAGEIND’s debt levels have fallen from ₹948.95M to ₹876.81M over the last 12 months , which is made up of current and long term debt. With this debt payback, PAGEIND’s cash and short-term investments stands at ₹726.86M , ready to deploy into the business. On top of this, PAGEIND has generated ₹2.74B in operating cash flow over the same time period, resulting in an operating cash to total debt ratio of 312.02%, signalling that PAGEIND’s debt is appropriately covered by operating cash. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In PAGEIND’s case, it is able to generate 3.12x cash from its debt capital.
Can PAGEIND pay its short-term liabilities?
At the current liabilities level of ₹4.23B liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.96x. Generally, for Luxury companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Can PAGEIND service its debt comfortably?
With a debt-to-equity ratio of 5.76%, PAGEIND’s debt level is relatively low. This range is considered safe as PAGEIND is not taking on too much debt obligation, which may be constraining for future growth. We can check to see whether PAGEIND is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In PAGEIND’s, case, the ratio of 37.36x suggests that interest is comfortably covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.