India’s first opto-semiconductor chips manufacturer: The company enjoys first mover advantage and benefit from high barriers for entry into market due to the low availability of technology and machinery required to manufacture opto-semiconductors in India.
Revenue Growth: The company has witnessed a significant increase in revenue, escalating from ₹125.9 crore in FY22 to ₹649.0 crore in FY23, reflecting a growth rate of 415.6%. Historically, the company has achieved a CAGR growth of 1047.09% in 3 years.
Working Capital Woes: Working capital management challenges were evident as trade receivables increased from ₹26 Crore in FY22 to ₹133 Crore in FY23, maintaining a debtor days figure of 75 days in FY23 (unchanged from FY22). Conversely, trade payables remained relatively stable, rising from ₹15 Crore in FY22 to ₹20 Crore and reflecting creditor days of 16 days in FY23 (compared to 67 days in FY22).
Exceptional Profitability Ratios and Margins: The ROE of the company stands to be at 86.7% in FY23 vs 66.14% in FY22 and PAT margin stands at 25.9% in FY23 vs 27.2% in FY22.
Investment Thesis: Polymatech's worldwide reach and robust net margins indicate investment potential, yet concerns arise from inadequate working capital management, limited customer diversification, and a lack of financial transparency (meagre power & fuel expenses as compared to production and revenue recognized salaries mentioned in financial statements, compliance with Rule 9A of (Preferential and allotment of securities) Rules, 2014 and companies act 2013. Prospective investors should approach with caution, considering risks such as foggy financials and heightened competition that could potentially result in margin reductions.
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