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After looking at India Power Corporation Limited's (NSE:DPSCLTD) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether India Power's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
View our latest analysis for India Power
Could DPSCLTD beat the long-term trend and outperform its industry?
DPSCLTD's trailing twelve-month earnings (from 31 March 2019) of ₹284m has jumped 43% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.9%, indicating the rate at which DPSCLTD is growing has accelerated. What's the driver of this growth? Let's see whether it is merely a result of industry tailwinds, or if India Power has seen some company-specific growth.
In terms of returns from investment, India Power has fallen short of achieving a 20% return on equity (ROE), recording 2.5% instead. Furthermore, its return on assets (ROA) of 5.4% is below the IN Electric Utilities industry of 7.3%, indicating India Power's are utilized less efficiently. However, its return on capital (ROC), which also accounts for India Power’s debt level, has increased over the past 3 years from 1.5% to 3.4%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 39% to 36% over the past 5 years.
What does this mean?
India Power's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are affecting the entire industry hence the high industry growth rate over the same period of time. I recommend you continue to research India Power to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for DPSCLTD’s future growth? Take a look at our free research report of analyst consensus for DPSCLTD’s outlook.
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Financial Health: Are DPSCLTD’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.