In FY25, the Company’s revenue increased by ~ 34.2% to LKR~1.15bn (FY24: LKR~858.58mn) due to better demand and downward revision in prices of batteries and LED bulbs. Battery revenues declined in FY25 as the Company adjusted its prices in line better import prices. The Company's gross profit stood at ~28.4% in FY25. However, operating margin remained at just ~4.2%. Laxapana's net profit was LKR~166mn (FY24: LKR~177mn) on back of higher dividend income and other income.
Despite maintaining healthy gross margins in its core business segments, price fluctuation and stagnant product demand have constrained operating profit. Laxapana is exposed to foreign exchange volatility due to its reliance on imports. The Company is working on initiatives to improve margins through technological changes in its LED bulb segment. This is expected to increase market share and make the segment more profitable. Laxapana acquired Sterling Steels Private Limited financed mainly through debt, highlight Laxapana's commitment to growth and diversification.
The Company has a low leveraged capital structure (20%) with strong coverages. The working capital requirements of the Company emerge from its inventory and trade receivable financing with net working capital days standing at ~130 days.
The rating is dependent on the Company's ability to improve and sustain its profitability from core operations. Effective working capital management and maintaining strong coverages remain important. Continued support from the Group and resulting synergies bode well for the rating.