Graviss Hospital, a microcap entity in the hotel, resort, and restaurant sector, has reported impressive financial performance for the second quarter of the fiscal year 2024-2025.
Despite receiving a 'Sell' recommendation from MarketsMojo, the company's Profit After Tax (PAT) increased by 487.4% to reach Rs 8.91 crore. Net sales also surged by 31.39% year on year, totaling Rs 12.60 crore. This marks the highest PAT recorded in the last five quarters, indicating a significant turnaround in profitability.
However, there are concerns about Graviss Hospital's declining operating cash flow, which has consistently decreased over the past three years, reaching an annual figure of Rs 8.86 crore. This raises questions about the sustainability of the company's financial health, especially as it relies heavily on non-operating income, which accounted for 271.43% of Profit Before Tax (PBT) in the recent quarter. This heavy dependence on non-operating income could indicate potential vulnerabilities in the business model.
Despite the positive financial indicators, the market's response has been cautious. The 'Sell' recommendation from MarketsMojo reflects skepticism among investors about the long-term viability of Graviss Hospital's financial strategies. While the company's score has improved from -7 to 13 in the past three months, concerns about cash flow and income sustainability remain critical.
Investors are advised to carefully consider Graviss Hospital's impressive growth figures in light of declining operating cash flow and increasing reliance on non-operating income. The financial community is closely monitoring these developments as they could have significant implications for the company's future performance and stock valuation.