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When The New India Assurance Company Limited’s (NSEI:NIACL) 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 New India Assurance’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not NIACL actually performed well. Below is a quick commentary on how I see NIACL has performed. See our latest analysis for New India Assurance
How Well Did NIACL Perform?
For the purpose of this commentary, I like to 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 method allows me to examine different stocks in a uniform manner using the most relevant data points. For New India Assurance, its latest earnings (trailing twelve month) is ₹10.46B, which, relative to the previous year’s level, has increased by 22.81%. Given that these values may be fairly nearsighted, I have computed an annualized five-year value for NIACL’s earnings, which stands at ₹10.12B This shows that, on average, New India Assurance has been able to consistently grow its net income over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is only due to industry tailwinds, or if New India Assurance has experienced some company-specific growth. The ascend in earnings seems to be driven by a solid top-line increase beating its growth rate of expenses. Though this brought about a margin contraction, it has made New India Assurance more profitable. Scanning growth from a sector-level, the IN insurance industry has been growing its average earnings by double-digit 15.41% over the previous twelve months, and a less exciting 7.28% over the previous five years. This means any tailwind the industry is gaining from, New India Assurance is capable of amplifying this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While New India Assurance has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research New India Assurance to get a better picture of the stock by looking at:
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Financial Health: Is NIACL’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 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.