When Ruchi Infrastructure Limited (NSEI:RUCHINFRA) announced its most recent earnings (31 March 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Ruchi Infrastructure performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see RUCHINFRA has performed. Check out our latest analysis for Ruchi Infrastructure
Was RUCHINFRA’s recent earnings decline indicative of a tough track record?
For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to assess different companies on a more comparable basis, using the most relevant data points. For Ruchi Infrastructure, the most recent earnings -₹185.0M, which, relative to the prior year’s level, has become more negative. Since these figures may be fairly short-term thinking, I have computed an annualized five-year value for Ruchi Infrastructure’s earnings, which stands at ₹13.4M.
We can further examine Ruchi Infrastructure’s loss by researching what has been happening in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -14.19%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the IN consumer retailing industry has been growing, albeit, at a unexciting single-digit rate of 8.31% over the prior twelve months, and a flatter 1.61% over the previous five years. This shows that any uplift the industry is deriving benefit from, Ruchi Infrastructure has not been able to gain as much as its industry peers.
What does this mean?
Though Ruchi Infrastructure’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Ruchi Infrastructure may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Ruchi Infrastructure to get a more holistic view of the stock by looking at:
1. Financial Health: Is RUCHINFRA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.