Rising LeverageAn increasing debt-to-equity trend raises financial leverage and interest cost exposure over the medium term. Higher leverage can limit strategic flexibility, increase vulnerability to rate or cashflow shocks, and constrain capacity for opportunistic investment or dividends, making capital allocation more sensitive to macro conditions.
Volatile Operating Cash FlowFluctuating operating cash flow points to inconsistent cash conversion and potential sensitivity to timing, working capital or cyclical demand. This volatility complicates forecasting, can necessitate precautionary liquidity buffers, and increases reliance on external funding during down cycles, weakening financial resilience.
Modest Net Profit MarginA mid-single-digit net margin limits retained earnings and the cushion available for reinvestment or debt reduction despite strong revenue. Modest net profitability can slow equity buildup and makes returns more sensitive to cost inflation or margin compression, reducing long-term capital formation compared with higher-margin peers.