by Prashant Marathe | EduInvesting.in | 22 May 2025
🔍 At a Glance:
Supreme Power just lit up the SME board with strong FY25 results:
- 💰 Revenue: ₹148.35 Cr
- 📈 Net Profit: ₹18.6 Cr
- 🧮 EPS: ₹7.44
- 📍 CMP: ₹136
But beneath the glowing P&L lies a monster capex bill, rising receivables, and a debt-equity cocktail stronger than your dad’s Diwali daru.
Let’s switch on the financial scanner 🔦
🏢 About the Company
Supreme Power Equipment Ltd is into the manufacturing, fabrication, and assembly of transformers.
Not the Optimus Prime kind. The substation kind — for electrical infrastructure across India.
They claim to serve DISCOMs, EPC companies, and large private infra projects.
🙇♂️ Key Managerial Personnel (KMP)
- CMD: Anonymous transformers-wala (details not disclosed in XBRL)
- Auditors: P P N & Company — unmodified opinion ✅
- Peer review certificate valid till Sep 2025, so no shady audit drama yet.
📊 FY25 Financial Summary
| Metric | Value (₹ Cr) |
|---|---|
| Revenue | 148.35 |
| Net Profit | 18.60 |
| EPS | ₹7.44 |
| PAT Margin | 12.5% |
| EBITDA Margin | 17.4% |
| Debt-Equity Ratio | 0.0018 ✅ |
👍 On paper: very clean
📈 EPS almost doubled YoY (FY24 PAT: ₹7.53 Cr)
🧮 Forward-Looking Fair Value (FV) Estimate
Let’s assume:
- Power infra midcap average P/E = ~16x (conservative)
- FY25 EPS = ₹7.44
🧮 FV = 7.44 × 16 = ₹119.04
But CMP is ₹136, which means the stock is already priced for growth.
So here’s the catch…
🔎 EduInvesting Auditor Mode: Balance Sheet Deep-Dive
We act like SEBI’s nosiest intern — you know the drill.
🧾 1. Trade Receivables = ₹43.57 Cr
That’s nearly 30% of annual revenue, and growing.
Receivables jumped ₹13.6 Cr in FY25, which means:
❗ Sales are happening… but cash is lagging.
⚠️ High risk if buyers delay.
🧱 2. Inventories = ₹22.53 Cr
Okayish for a manufacturing company — no red flag yet.
But “Changes in Inventory” is negative ₹8.93 Cr, so they stocked up quite a bit this year.
🏗️ 3. Capex Mania – ₹104.29 Cr!
They spent ₹104 Cr in FY25 for Purchase of Property, Plant & Equipment. And guess what?
Capital Work-in-Progress (CWIP) on the balance sheet = ₹49.35 Cr
Total fixed assets = ₹108.85 Cr
🛠️ They are clearly expanding big time — probably new plant, higher capacity, or automation.
But here’s the juicy part…
🧊 4. Cash Position Last Year: ₹33,000 😐
Cash This Year: ₹5.78 Cr
Better, but not confidence-inspiring for a ₹150 Cr revenue company.
💣 5. Trade Payables = ₹34.64 Cr
Of which:
- ₹19.36 Cr owed to MSMEs
- ₹15.28 Cr owed to others
So basically they are taking longer to pay, while customers are taking longer to pay them. 👎
📉 6. Other Red Flags:
| Red Flag | Amount (₹ Cr) | Comment |
|---|---|---|
| 💣 Short-Term Borrowings | ₹7.7 Cr | Not huge, but used to fund working capital |
| 🏦 Long-Term Borrowings | ₹8.64 Cr | Raised this year to fund that ₹104 Cr capex |
| 📉 Other Current Liabilities | ₹3.73 Cr | No details, unexplained bucket |
| 🔧 DSCR (Debt Service Coverage Ratio) | 0.10 | Danger zone. Anything < 1 = not healthy |
💸 Cash Flow Statement Breakdown
| Activity | Amount (₹ Cr) | Status |
|---|---|---|
| Operating Cash Flow | ₹37.02 Cr | ✅ Strong |
| Investing (Capex) | ₹(39.71) Cr | ✅ Normal |
| Financing (Debt raised) | ₹10.42 Cr | ✅ Needed |
| Net Cash Generated | ₹5.75 Cr | ✅ Healthy recovery from ₹0.33 Lakh last year |
So the company didn’t overextend — but their runway is tight.
🧠 EduInvesting Take
Supreme Power is executing well, growing fast, and building future capacity.
But they’re doing it with:
- High receivables
- Delayed payments to vendors
- One of the lowest DSCRs we’ve seen this season
That ₹104 Cr expansion will only pay off if:
✅ Orders keep coming
✅ Buyers pay faster
✅ Margins don’t shrink
Else? It’s a power trip that ends in a short circuit.
🧯 Risks & Red Flags
| 🔍 Risk | Detail |
|---|---|
| 🧾 ₹43.57 Cr Receivables | Slow collection trend |
| 🧨 ₹104 Cr Capex | Will strain cash if revenue slows |
| 🧊 DSCR = 0.10 | Debt servicing pressure in FY26 |
| 🧮 Low cash buffer | ₹5.78 Cr is decent, but not great |
| 🔧 CWIP-heavy | Capex must translate into sales fast |
🧪 Final Verdict: Good Power, Risky Circuit
If they continue Q4-style performance, stock can break ₹150+.
But if working capital stretches, expect short-circuits in the form of:
- Delays
- Missed interest payments
- Margin pressure
🧠 Watch like an auditor. Invest like a sceptic.
Or as we like to say: Buy the transformer stock only if you can handle the voltage.
Tags: Supreme Power Equipment FY25 results, SME stocks India, Capex heavy smallcaps, transformer manufacturers India, EduInvesting balance sheet audit, cash flow analysis, high EPS SME stock, risky DSCR companies
