Understanding how Shriram Pistons & Rings Limited (NSEI:SHRIPISTON) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Shriram Pistons & Rings is doing by comparing its latest earnings with its long-term trend as well as the performance of its auto components industry peers. Check out our latest analysis for Shriram Pistons & Rings
Could SHRIPISTON beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine different companies on a more comparable basis, using the latest information. Shriram Pistons & Rings’s latest twelve-month earnings is ₹1,181.0M, which, against last year’s figure, has moved up by 28.88%. Given that these figures are fairly short-term, I have estimated an annualized five-year value for SHRIPISTON’s earnings, which stands at ₹788.9M. This shows that, generally, Shriram Pistons & Rings has been able to consistently grow its net income over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is merely owing to industry tailwinds, or if Shriram Pistons & Rings has experienced some company-specific growth. The hike in earnings seems to be driven by a substantial top-line increase overtaking its growth rate of costs. Though this resulted in a margin contraction, it has made Shriram Pistons & Rings more profitable. Viewing growth from a sector-level, the IN auto components industry has been growing its average earnings by double-digit 10.24% in the prior twelve months, and 11.47% over the past five. This suggests that whatever tailwind the industry is profiting from, Shriram Pistons & Rings is capable of amplifying this to its advantage.
What does this mean?
Though Shriram Pistons & Rings’s past data is helpful, it is only one aspect of my investment thesis. While Shriram Pistons & Rings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Shriram Pistons & Rings to get a better picture of the stock by looking at:
1. Financial Health: Is SHRIPISTON’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.