Same company.
Two numbers walking apart for three years.
Earnings per share compounds. Free cash flow per share does not. Illustrative trajectory, Rs per share.
| Per share |
FY1 |
FY2 |
FY3 |
| Earnings (EPS) | 10.00 | 13.00 | 16.90 |
| Free cash flow | 9.00 | 9.20 | 9.00 |
| Conversion (FCF/EPS) | 0.90 | 0.71 | 0.53 |
EPS grew 30 percent a year. Free cash flow stayed flat. The gap is the accruals, the part of profit that was booked but never arrived as cash. Receivables climb, inventory builds, capex runs above depreciation, costs get capitalised instead of expensed. The earnings rose. The bank balance did not. Conversion falling for three straight reporting periods is the tell, not one soft quarter.