(JFL) Janaki Finance Q4 2024/25: Struggling with Losses and Liquidity Challenges

Total Revenue

The total revenue for Q4 2024/25 stands at Rs. 479,945.20 thousand, marking a 37.15% increase compared to the previous quarter's Rs. 403,451.73 thousand. However, the revenue in Q4 is slightly lower than in the same period last year, where it stood at Rs. 487,489.38 thousand. This reflects a recovery from the major slump observed in Q2, where revenue fell by 68.54%. Despite this growth, the overall performance indicates volatility in the company’s revenue generation capacity, which may be influenced by market conditions or operational challenges.

Gross Profit

Gross profit for Q4 2024/25 reached Rs. 166,704.74 thousand, a solid increase from Rs. 155,128.08 thousand in Q3. The gross profit margin improved to 34.73% in Q4, compared to 23.20% in the same quarter last year. The increase in gross profit margin shows a more efficient cost management or a shift in product/service mix, contributing positively to profitability despite the mixed revenue trends. However, the margin had been under pressure in Q2, with only 6.43%gross margin, indicating challenges earlier in the year.

Net Income

Net income remains negative in Q4 2024/25, with a loss of Rs. 207,284.11 thousand. This represents an improvement from the previous quarter's Rs. 128,325.84 thousand loss. However, compared to the same quarter last year, net income was still negative at Rs. 137,163.03 thousand. The net margin is also significantly negative at -43.19%, reflecting the ongoing challenges the company faces in achieving profitability. The company has been unable to turn around losses, with Q1 showing a temporary spike in net income but followed by losses in subsequent quarters.

Return on Assets (ROA) and Return on Equity (ROE)

The Return on Assets (ROA) stands at -3.44% in Q4 2024/25, which is worse than the -2.44% in the same period last year, indicating that the company is struggling to generate earnings from its assets. The Return on Equity (ROE) also shows a negative trend at -78.99%, a substantial decline compared to -22.91% last year. The negative returns highlight the company’s failure to generate value for shareholders and its inability to efficiently utilize its capital base.

Earnings Per Share (EPS) and Price-to-Earnings (P/E) Ratio

The Earnings Per Share (EPS) stands at -30.02 in Q4 2024/25, reflecting a significant negative value and worsening from the previous year’s -19.87. This marks a continued struggle for the company in generating profits for shareholders. Additionally, the Price-to-Earnings (P/E) ratio is negative at -16.78 in Q4, compared to -37.38 in Q4 of the previous year. A negative P/E ratio indicates that the company’s stock is trading at a multiple of negative earnings, which further indicates investor concerns about future profitability.

Book Value and Market Value per Share

The Book Value per Share has dropped from Rs. 57.86 in Q4 2023/24 to Rs. 3.01 in Q4 2024/25, indicating a significant erosion of the company’s net worth on a per-share basis. Despite this, the Market Value per Share remains relatively high at Rs. 503.87 in Q4, indicating that investors might still be willing to pay a premium based on future expectations or speculation, despite the negative financials.

Capital Fund to Risk-Weighted Assets (RWA)

The Capital Fund to RWA ratio is negative at -1.91% in Q4 2024/25, which indicates that the company’s capital base is insufficient to cover its risk-weighted assets, a red flag for potential solvency issues. This decline from 1.39% in the previous year signals a weakening financial position and may raise concerns among investors and regulators.

Non-Performing Loan (NPL) Ratio

The Non-Performing Loan (NPL) to Total Loan ratio has risen to 48.61% in Q4 2024/25, up from 37.13% in the same quarter last year. This sharp increase in NPLs suggests a growing proportion of loans that are unlikely to be repaid, posing a risk to the company's financial stability and indicating potential challenges in its loan portfolio management.

Cost of Funds and Credit Deposit Ratio

The Cost of Funds decreased slightly to 7.61% from 9.01% in the same quarter last year, indicating some improvement in the company’s funding costs. The Credit Deposit Ratio also saw a marked increase to 85.74% in Q4 2024/25, up from 74.19% last year, reflecting an aggressive expansion in lending relative to deposits. While this might signal increased loan activity, it could also expose the company to liquidity risks if deposit growth does not keep pace with loan disbursement.

Net Liquid Assets

The Net Liquid Asset ratio for Q4 2024/25 is at 37.01%, a notable increase from 1.39% in Q4 2023/24. This suggests that the company has improved its liquidity position, likely due to higher cash reserves or short-term assets. However, the previous period’s liquidity challenges, especially in Q3 with a 22.00% ratio, highlight the volatility in managing liquid assets.