Oval Projects Engineering Limited reported third cash outflow

Oval reported an operating cash outflow of Rs 5.69 crore in H1 FY27, its third reported period of negative operating cash flow, while closing cash and bank balance reached Rs 29.51 crore. The presentation records Rs 11.45 crore of financing inflow in H1 FY27 alongside the higher cash balance.

Why did Oval report negative operating cash flow?

Oval reported cash utilized in operating activities of Rs 15.75 crore in FY25, Rs 30.33 crore in FY26 and Rs 5.69 crore in H1 FY27. These are the three operating-cash-flow periods shown in the presentation, and each is negative. The H1 FY27 outflow was lower than FY26's Rs 30.33 crore outflow, but it remained cash utilization rather than cash generated from operations.

The presentation does not provide a line-by-line bridge from profit to operating cash flow, so it does not identify a specific cause for the negative figures. Its balance sheet nevertheless shows current-asset movements over the period, including trade receivables increasing from Rs 35.07 crore at FY26 to Rs 49.71 crore at H1 FY27 and short-term loans and advances rising from Rs 38.91 crore to Rs 48.63 crore.

How did Oval remain profitable while operating cash was negative?

Oval remained profitable in each full year shown even though operating cash flow was negative in FY25 and FY26. Profit after tax rose from Rs 4.37 crore in FY24 to Rs 9.33 crore in FY25 and Rs 14.81 crore in FY26, while operating cash utilization was Rs 15.75 crore in FY25 and Rs 30.33 crore in FY26. Operating cash flow for FY24 was not disclosed in the presentation.

The annual operating-profit trend was also positive. Earnings before interest, tax, depreciation and amortization, or EBITDA, increased from Rs 10.86 crore in FY24 to Rs 18.31 crore in FY25 and Rs 28.25 crore in FY26; EBITDA margin increased from 13.74% to 18.44% over the same interval. In H1 FY27, revenue from operations rose 16.01% year on year to Rs 70.72 crore and EBITDA increased to Rs 13.60 crore from Rs 12.33 crore.

The comparison separates reported accounting earnings from operating cash generation. FY26 profit after tax of Rs 14.81 crore exceeded FY25's Rs 9.33 crore, but operating cash utilization widened to Rs 30.33 crore from Rs 15.75 crore. Finance costs also increased from Rs 4.73 crore in FY25 to Rs 6.43 crore in FY26, although the presentation does not expressly link that increase to individual borrowing lines.

What changed in Oval’s working-capital balances?

Oval’s current-asset mix shifted toward receivables and short-term loans and advances by H1 FY27. Trade receivables increased by Rs 14.64 crore from Rs 35.07 crore at FY26 to Rs 49.71 crore at H1 FY27, while short-term loans and advances rose by Rs 9.72 crore to Rs 48.63 crore. Over the same comparison, inventories declined by Rs 1.28 crore to Rs 57.79 crore.

Management attributes Oval’s higher working-capital cycle to seasonality, stating that approximately 60% of annual turnover is generated during February and March. Management says this concentration results in a higher year-end receivables balance, while receivable days remain within normal levels and working-capital requirements are in line with industry standards. The presentation does not disclose the receivable-days figure or an industry benchmark.

The balance-sheet data also shows that receivables were lower at FY26 than FY25 before rising in H1 FY27. Receivables fell from Rs 43.07 crore in FY25 to Rs 35.07 crore in FY26, whereas inventories increased from Rs 43.69 crore to Rs 59.07 crore over that annual period. Short-term loans and advances had a larger movement, rising from Rs 14.86 crore in FY25 to Rs 38.91 crore in FY26.

How were Oval’s cash balance and assets funded?

Oval reported financing inflows alongside its rising cash balance and operating outflows. Closing cash and bank balance increased from Rs 17.40 crore in FY25 to Rs 25.46 crore in FY26 and Rs 29.51 crore in H1 FY27. Financing cash inflows were Rs 18.01 crore in FY25, Rs 49.97 crore in FY26 and Rs 11.45 crore in H1 FY27.

Borrowings increased during the same periods. Long-term borrowings rose from Rs 5.26 crore in FY25 to Rs 13.28 crore in FY26 and Rs 17.30 crore in H1 FY27, while short-term borrowings increased from Rs 36.70 crore to Rs 41.95 crore and then Rs 47.54 crore. Other long-term liabilities also rose from Rs 4.92 crore in FY25 to Rs 14.24 crore in H1 FY27.

Total assets rose from Rs 144.44 crore at FY25 to Rs 198.58 crore at FY26 and Rs 225.97 crore at H1 FY27. On the funding side, reserves and surplus increased from Rs 40.72 crore to Rs 90.45 crore and then Rs 96.70 crore. Trade payables to creditors other than micro and small enterprises declined from Rs 34.06 crore in FY25 to Rs 12.94 crore in FY26 before rising to Rs 16.78 crore in H1 FY27.

Conclusion

Oval’s disclosed figures show a gap between reported profit growth and operating cash generation. Profit after tax reached Rs 14.81 crore in FY26 after Rs 9.33 crore in FY25, while operating cash utilization widened to Rs 30.33 crore from Rs 15.75 crore. H1 FY27 retained an operating cash outflow of Rs 5.69 crore, even as the reported cash balance rose to Rs 29.51 crore amid financing inflows and higher borrowings.

The next disclosures will show whether receivables of Rs 49.71 crore and short-term loans and advances of Rs 48.63 crore convert into operating cash, particularly given management’s statement that about 60% of annual turnover occurs in February and March. Readers can also watch financing inflows and borrowings, and whether the presentation clarifies why H1 FY27 opening cash and bank balance was reported at Rs 46.60 crore while FY26 closing cash and bank balance was Rs 25.46 crore.