Eventions profits rose but operating cash flow stayed negative

Eventions Limited reported rising profit after tax, but its operating cash flow remained negative in FY25 and FY26. Eventions earned Rs 7.7201 crore in FY26, up from Rs 5.1259 crore in FY25, while cash used in operating activities widened to Rs 451.75 lakh as trade receivables rose by Rs 20.0136 crore.

Why did Eventions operating cash flow stay negative despite higher profits?

Eventions recorded negative operating cash flow because working-capital movements absorbed more cash than its operating profit generated. Profit before tax increased to Rs 10.217 crore in FY26 from Rs 7.0199 crore in FY25, but net cash used in operating activities rose to Rs 451.75 lakh from Rs 289.38 lakh. In FY24, Eventions generated Rs 29.10 lakh of operating cash against profit before tax of Rs 4.4249 crore.

The FY26 cash-flow reconciliation identifies a Rs 13.0166 crore adverse movement in working capital as the main reason for the gap. Finance cost of Rs 66.75 lakh and depreciation of Rs 18.68 lakh were added back, but cash used in operations before tax was Rs 19.466 crore and income tax paid was Rs 2.0543 crore. The project-based model requires Eventions to execute services before receiving final payments, making billing and collection timing material to cash conversion.

FY25 also showed a difference between accounting profit and operating cash. Eventions reported Rs 5.1259 crore of profit after tax in FY25, compared with Rs 3.2865 crore in FY24, while operating activities used Rs 289.38 lakh. The company attributed the FY25 working-capital outflow mainly to an Rs 8.2985 crore decrease in other current liabilities, primarily customer advances used in event execution.

How much did receivables contribute to Eventions operating cash flow gap?

Eventions' Rs 20.0136 crore increase in trade receivables was the largest disclosed contributor to the FY26 operating cash flow gap. Trade receivables rose 203.04% to Rs 29.8709 crore at March 31, 2026, from Rs 9.8568 crore at March 31, 2025. The FY26 balance also exceeded the Rs 12.5529 crore reported at March 31, 2024.

Unbilled revenue, meaning revenue recognised before an invoice is issued, increased to Rs 20.5025 crore at March 31, 2026 from Rs 7.9369 crore a year earlier and Rs 4.6176 crore at March 31, 2024. Eventions cited multi-stage cost finalisation, customer approvals after event execution, third-party validation of reimbursable participant expenses and collection cycles of event-management companies as reasons for the build-up. The company stated that revenue recognition follows applicable accounting standards.

Eventions' customer concentration adds importance to collections from a limited group of accounts. Its largest customer contributed 42.72% of FY26 revenue from operations, while its top 10 customers contributed 84.59%. The top-10 share declined from 96.67% in FY25, but Eventions' conversion of receivables and unbilled revenue into cash still depends on customer approvals and payment cycles.

What lifted Eventions profit while cash conversion weakened?

Eventions' FY26 profit increase reflected revenue growth and a changed event mix, rather than cash collections. Revenue from operations rose 13.95% to Rs 99.7396 crore in FY26, and profit after tax increased 45.29% to Rs 7.7201 crore. Profit after tax margin increased to 7.67% from 5.82% in FY25 and 3.77% in FY24.

Meetings, Incentives, Conferences and Exhibitions, or MICE, generated Rs 91.0493 crore, representing 91.29% of FY26 revenue from operations. Events generated Rs 8.5789 crore and Free Independent Travel, or FIT, and other services generated Rs 11.14 lakh. Eventions said the number of long-haul international events increased to 17 in FY26 from nine in FY25; it disclosed margins of about 21% to 27% for long-haul events, compared with about 11% to 20% for short-haul international and domestic events.

Cost of services consumed increased 12.69% to Rs 82.8719 crore in FY26, below the 13.95% revenue increase, and declined to 83.09% of revenue from 84.02% in FY25. Employee benefits expense fell 17.06% to Rs 4.0295 crore. These changes supported reported profit, but they do not determine when Eventions can invoice or collect the Rs 29.8709 crore receivables balance.

How did working-capital needs affect Eventions borrowings?

Eventions increased borrowings as receivables expanded and operating activities consumed cash. Total borrowings rose to Rs 9.4423 crore at March 31, 2026 from Rs 3.5739 crore at March 31, 2025 and Rs 2.0051 crore at March 31, 2024. The company attributed the increase to working-capital requirements for higher-ticket projects, where execution costs arise before final customer payments.

Finance costs increased 70.14% to Rs 66.75 lakh in FY26 from Rs 39.23 lakh in FY25, while interest on bank loans rose to Rs 56.60 lakh from Rs 26.79 lakh. Eventions reported total equity of Rs 18.1338 crore at March 31, 2026, producing a total-borrowings-to-total-equity ratio of 0.52. The financial-indebtedness schedule showed Rs 7.2047 crore outstanding under bank overdrafts, compared with Rs 93.87 lakh a year earlier.

Cash generated from financing activities was Rs 5.6908 crore in FY26, compared with Rs 1.1765 crore in FY25. FY26 financing cash flow included Rs 2.8978 crore of borrowing proceeds, Rs 49 lakh from an equity rights issue, Rs 3.0295 crore of borrowings repaid and Rs 66.75 lakh of finance cost. Eventions disclosed that its fund-based facilities generally carry annual interest rates of 9% to 19%, while its bank overdraft is secured by fixed deposits and a director's property.

Conclusion

Eventions' FY26 financial results show that reported profit and operating cash flow moved in opposite directions for a second consecutive year. Profit after tax rose by Rs 2.5942 crore from FY25, but operating cash outflow increased by Rs 162.37 lakh as receivables, short-term loans and advances, and other current assets absorbed cash. The company’s event-execution model explains the timing mismatch, but the scale of receivables makes collections central to liquidity.

The next measure to watch is whether Eventions converts its Rs 20.5025 crore unbilled revenue and Rs 29.8709 crore trade receivables at March 31, 2026 into cash without a further increase in funding needs. Eventions has disclosed approved unsecured business-loan facilities, including up to Rs 75 lakh from InCred Financial Services at 18.5% per annum, which provides a disclosed source of additional funding while collection timing remains unresolved.