In This Article:
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Balkrishna Industries Limited’s (NSE:BALKRISIND) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View our latest analysis for Balkrishna Industries
Did BALKRISIND beat its long-term earnings growth trend and its industry?
BALKRISIND’s trailing twelve-month earnings (from 31 March 2018) of ₹7.4b has increased by 2.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which BALKRISIND is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Balkrishna Industries has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 13% exceeds the IN Auto Components industry of 7.7%, indicating Balkrishna Industries has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Balkrishna Industries’s debt level, has increased over the past 3 years from 13% to 18%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 150% to 21% over the past 5 years.
What does this mean?
Balkrishna Industries’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Balkrishna Industries has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Balkrishna Industries to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for BALKRISIND’s future growth? Take a look at our free research report of analyst consensus for BALKRISIND’s outlook.
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Financial Health: Are BALKRISIND’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.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.