Investors with a long-term horizong may find it valuable to assess Binani Industries Limited’s (NSEI:BINANIIND) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Binani Industries is currently performing. Check out our latest analysis for Binani Industries
How Did BINANIIND’s Recent Performance Stack Up Against Its Past?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine many different companies on a more comparable basis, using the most relevant data points. For Binani Industries, its most recent twelve-month earnings is -₹4,609.2M, which compared to last year’s level, has become more negative. Given that these values are relatively short-term thinking, I’ve estimated an annualized five-year figure for Binani Industries’s earnings, which stands at -₹3,705.5M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can analyze Binani Industries’s loss by looking at what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has risen by a mere 4.84%. Since top-line growth is also pretty flat, the key to profitability moving forward would be managing costs. Viewing growth from a sector-level, the IN construction materials industry has been growing its average earnings by double-digit 19.09% in the previous year, and a less exciting 4.40% over the past five years. This means any uplift the industry is benefiting from, Binani Industries has not been able to gain as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues Binani Industries may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Binani Industries to get a more holistic view of the stock by looking at:
1. Financial Health: Is BINANIIND’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.