When Hindustan Petroleum Corporation Limited’s (NSEI:HINDPETRO) announced its latest earnings (31 March 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Hindustan Petroleum’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not HINDPETRO actually performed well. Below is a quick commentary on how I see HINDPETRO has performed. Check out our latest analysis for Hindustan Petroleum
How Well Did HINDPETRO Perform?
I prefer to use the ‘latest twelve-month’ data, 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 similar basis, using the most relevant data points. For Hindustan Petroleum, the most recent bottom-line is ₹82,358.2M, which, in comparison to the prior year’s level, has escalated by a significant 76.18%. Given that these figures are somewhat short-term, I’ve calculated an annualized five-year figure for Hindustan Petroleum’s net income, which stands at ₹25,527.2M. This shows that, on average, Hindustan Petroleum has been able to gradually raise its profits over the last couple of years as well.
What’s enabled this growth? Let’s see if it is only attributable to an industry uplift, or if Hindustan Petroleum has experienced some company-specific growth. In the past few years, Hindustan Petroleum grew its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the IN oil and gas industry has been growing its average earnings by double-digit 45.95% over the previous year, and a more muted 5.53% over the previous few years. This suggests that whatever uplift the industry is enjoying, Hindustan Petroleum is capable of leveraging this to its advantage.
What does this mean?
Though Hindustan Petroleum’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Hindustan Petroleum gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Hindustan Petroleum to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HINDPETRO’s future growth? Take a look at our free research report of analyst consensus for HINDPETRO’s outlook.