Kirloskar Brothers Key Ratios

The substantial increase in ROE from 7.15% to 21.75% over the last four years indicates a strong enhancement in profitability, underpinned by a rising PAT margin, which rose from 3.09% to 8.70%.Asset turnover has improved from 1.11x to around 1.31x, demonstrating more effective use of assets to generate sales, although it shows slight fluctuations in years.Leverage has decreased significantly from 2.40x to 1.82x, indicating a reduction in debt reliance, which further solidifies the robust improvement in ROE driven by profitability rather than increasing leverage.

Inventory days demonstrate an overall decreasing trend from 74.39 days to 68.52 days, which suggests better inventory management, although there was a spike in 2024 that warrants attention.Receivable days have shown consistent improvement, dropping from 58.43 days to 40.84 days, highlighting enhanced efficiency in collecting payments from customers.Payable days decreased from 123.91 days to 105.19 days, reflecting an improved cash flow position, although the overall cash conversion cycle with slight variability hints at potential areas for efficiency enhancement.

ROE rose significantly from 7.15% to 21.75%, driven primarily by enhanced profitability, with ROA rising concurrently, indicating efficient utilization of assets.ROCE also saw improvement, moving from 11.42% to 28.69%, illustrating a strong performance relative to capital employed, leveraging both equity and debt effectively.Overall, ROA improvement from 2.97% to 11.65% reveals that the company is generating higher returns on total assets, emphasizing a balanced growth in returns across equity and total assets.