Prabha Energy Limited — financial distress indicators
Financial-health summary
Prabha Energy Limited's reported numbers place it in the 'Weak' financial-health band (distress score 56/100). The main indicators are operating profit does not cover interest, severe working-capital shortfall and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 38% and the market-implied (Merton) default probability is 0.0%. In its favour: revenue still growing (+55% yoy).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -1.73×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Current ratio is 0.70 (current assets cover 70% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Total debt is 126.5× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Short-term debt is 1.3× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Operating cash flow negative in 3 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Revenue still growing (+55% YoY).
- High insider/promoter ownership (95%) aligns management with survival.
📰 Recent news scan
- Seamec vessel SAMUDRA PRABHA recused for statutory drydocking - scanx.tradeGoogle News · 2026-10-05
- Prabha Energy Ltd Shareholding Pattern – Promoters, FIIs & DIIs - Value ResearchGoogle News · 2026-08-29
- Colgate Shares Fall 1.2% As CEO Prabha Narasimhan To Step Down - NDTV ProfitGoogle News · 2026-08-21
- PRABHA ENERGY Share Price Gain: Technicals and Valuation - UnivestGoogle News · 2026-08-18
- Volume Gainers, August 18, 2026, 3:00 PM IST - HDFC SkyGoogle News · 2026-08-18
- PRABHA Stock Price and Chart — NSE:PRABHA - TradingViewGoogle News · 2026-06-11
⚖️ Indian legal pathway — the IBC, 2016
How insolvency starts
- A financial creditor (§7), an operational creditor after a demand notice (§§8–9) or the company itself (§10) can apply to the NCLT once a default of at least ₹1 crore occurs (§4).
- On admission a moratorium (§14) stops suits and recovery; the board is suspended and an insolvency professional runs the company.
- The Committee of Creditors approves a resolution plan with 66% of voting share (§30(4)) within an outer limit of 330 days (§12); otherwise liquidation (§33) under the §53 waterfall — equity ranks last. Defaulting promoters are generally barred from bidding (§29A).
Earlier warning stages
- RBI's Prudential Framework for Resolution of Stressed Assets (7 June 2019): lenders must review a borrower within 30 days of default and implement a resolution plan, or provide more.
- Listed companies must disclose loan defaults to exchanges under SEBI (LODR); a rating downgrade to “D” is a public signal.
- Auditors must report going-concern uncertainty (SA 570 / Ind AS 1).
Frequently asked questions
What do Prabha Energy Limited's financial-health indicators show?
As of 2026-10-09, Prabha Energy Limited's public financial data places it in the 'Weak' band with a distress score of 56/100, driven by operating profit does not cover interest, severe working-capital shortfall and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Prabha Energy Limited's financial distress score?
56/100 ('Weak'). Ohlson O-score -0.48 (model 1-year failure probability 38%). Merton distance-to-default 8.24 σ (model default probability 0.0%).
What works in Prabha Energy Limited's favour?
Revenue still growing (+55% YoY). High insider/promoter ownership (95%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
Under the IBC the Committee of Creditors controls the resolution; the §53 waterfall pays secured creditors and workers first and equity last. In most resolution plans existing shareholders are wiped out or left with a token stake, and the company may be delisted.
Other Energy, Oil & Gas companies with distress indicators
- Aban Offshore Limited (ABAN)Very weak 95/100
- Oil Country Tubular Limited (OILCOUNTUB)Very weak 74/100
- Anmol India Limited (ANMOL)Watch 35/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.