by Prashant Marathe | EduInvesting.in | 22 May 2025

⚡ At a Glance:

Tembo Global Industries just dropped their Q4 FY25 results and the headline numbers look spicy — revenue up, profit solid, EPS rising like Adani stock in 2021.

But look under the hood, and you’ll find:

• 🧾 Negative operating cash flow
• 💸 ₹2,205 Cr in current borrowings
• 🧟 “Other financial assets” worth ₹338 Cr just… sitting there?
• 🧂 And ₹57 Cr in “Other Liabilities” that no one is talking about.

So, multibagger in the making or just another leveraged textile-meets-engineering cocktail waiting to go bust?

Let’s find out.

🏢 About the Company

Tembo Global Industries Ltd manufactures and trades in engineering products and fabrics.
Yes, steel brackets and synthetic textiles in the same company — because why not diversify like your neighbourhood kirana store?

They operate under two main segments:

• 🧰 Engineering: pipes, brackets, supports (used in infra and MEP)
• 🧵 Fabrics: trading of textile materials — a fancy way to say wholesale polyester

🙇‍♂️ Key Managerial Personnel (KMP)

• CMD: Jayant Baheti – also the public face of the company
• CFO: Arvind Rathi – the guy who probably approved ₹825 Cr in “Other Financial Assets”
• Auditor: R.A. Kuvadiya & Co. – gave an unmodified opinion, but let’s just say we have questions.

📊 Financials (Q4 FY25 + Full Year)

✅ Q4 FY25 (Standalone)

✅ Q4 FY25 (Consolidated)

✅ FY25 (Consolidated)

YoY revenue is up significantly, net profit grew 3.4x, and EPS looks too good to be true.
(And spoiler: it might be.)

🧮 Forward-Looking Fair Value (FV) Calculation

Industry P/E (Infra/Engineering Midcap Blend): ~18x
EPS (FY25): ₹32.77
Fair Value Estimate: ₹32.77 × 18 = ₹590

📉 Current Market Price (CMP): ₹470 (as of 22 May 2025)
💥 Upside Potential: ~25.5%

But this assumes the earnings are sustainable, and the balance sheet doesn’t blow up.

Let’s stress test that next. 👇

🧨 Red Flags & Balance Sheet Anomalies

1. 🧊 Negative Operating Cash Flow: ₹(203 Cr)

Despite ₹54 Cr in profits, they burned over ₹200 Cr in operating cash — thanks to:

• Inventory buildup: ₹1115 Cr in inventory
• Ballooning trade receivables: ₹1201 Cr
• “Other Current Assets”: ₹553 Cr (unclear breakup)

👀 This is classic earnings without cash. Almost all FY25 profit was on paper.

2. 💰 ₹2,205 Cr in Current Borrowings

That’s 3.2x their equity base of ₹678 Cr.

👎 Debt-to-equity ratio is now 3.25, which is uncomfortably high — especially for a company with negative cash flow and no obvious moat.

3. 🥷 “Other Financial Assets” – ₹825 Cr

No explanation. No annexure. No transparency.

This line item has become the new parking lot for… well, anything.
Loans to group entities? Advances to suppliers? Imaginary crypto wallet?

We don’t know. But it’s fishy. 🐠

4. 🔁 “Other Liabilities” – ₹57 Cr

Lumped under Current Liabilities and not broken down in the statement.

What are these liabilities? Deferred incentives? Dues to vendors? Random provisions?

We don’t know. SEBI should.

5. 📉 Equity Dilution Incoming?

The paid-up capital increased this year.
Also:

• ₹21.8 Cr raised via share issue
• ₹101 Cr via “Other equity instruments” 👀
• ₹56.5 Cr in payouts on same

What was this about? Preferential issue? CCDs? GDRs?

No details. And that’s a problem.

🔭 Estimated Growth & Industry Outlook

Tembo operates in:

• Infrastructure support products — expected to grow with India’s infra push
• Fabric trading — a cutthroat, low-margin sector

Unless they demerge or focus, the hybrid model limits valuation multiples.

Still, if infra continues booming and they clean up receivables, they can sustain 20–25% growth.

📦 But debt reduction MUST be priority #1.

🧠 EduInvesting Take

Tembo is that student who scores 90% in theory but fails the practical.

• The P&L looks sexy
• The cash flow screams fraud or mismanagement
• And the balance sheet is one giant mystery novel

They may not be cooking the books, but they’re definitely simmering something on low flame.

⚖️ Verdict: Great on paper, dangerous in practice.
Invest if you’re a bull with a fire extinguisher.

⚠️ Risks & Red Flags Summary

• ❌ Negative operating cash flow
• ❌ Exploding receivables
• ❌ High short-term debt
• ❌ “Other” assets and liabilities with no clarity
• ❌ Equity dilution with minimal disclosure

📌 Final Thought

If you invest in Tembo now, make sure you know what you’re betting on:

You’re not buying just “profits” — you’re buying their ability to collect money, reduce debt, and stop hiding mysteries in “other” line items.

Tags: Tembo Global Industries Q4 FY25 results, Tembo balance sheet analysis, negative cash flow stocks, multibagger or value trap, EduInvesting, high EPS low cash flow companies, current borrowings, equity dilution, investing red flags