For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Jai Balaji Industries Limited (NSEI:JAIBALAJI) useful as an attempt to give more color around how Jai Balaji Industries is currently performing. Check out our latest analysis for Jai Balaji Industries
Commentary On JAIBALAJI’s Past Performance
I like to use data from the most recent 12 months, 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 method enables me to analyze different companies in a uniform manner using new information. For Jai Balaji Industries, its most recent twelve-month earnings is -₹2,379.3M, which, relative to the previous year’s figure, has become less negative. Since these figures may be fairly short-term, I’ve calculated an annualized five-year figure for JAIBALAJI’s earnings, which stands at -₹3,019.5M. This means even though net income is negative, it has become less negative over the years.
We can further evaluate Jai Balaji Industries’s loss by researching what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has been negative at -8.34%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the IN metals and mining industry has been growing its average earnings by double-digit 27.08% over the previous twelve months, and a more subdued 3.25% over the past five years. This suggests that, though Jai Balaji Industries is currently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Jai Balaji Industries may be facing and whether management guidance has dependably been met in the past. You should continue to research Jai Balaji Industries to get a more holistic view of the stock by looking at:
1. Financial Health: Is JAIBALAJI’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.