When Shree Rama Newsprint Limited (NSEI:RAMANEWS) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Shree Rama Newsprint performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see RAMANEWS has performed. See our latest analysis for Shree Rama Newsprint
Were RAMANEWS’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like 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 technique enables me to analyze different companies in a uniform manner using the latest information. Shree Rama Newsprint’s most recent bottom-line -₹195.0M, which, against last year’s figure, has become less negative. Given that these values may be fairly myopic, I’ve determined an annualized five-year figure for RAMANEWS’s net income, which stands at -₹401.3M. This means that, though net income is negative, it has become less negative over the years.
Additionally, we can assess Shree Rama Newsprint’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has increased by a mere 2.66%. Since top-line growth is also pretty stale the key to profitability in the future would be controlling cost growth rates. Viewing growth from a sector-level, the IN forestry industry has been growing its average earnings by double-digit 17.48% in the past year, and 17.72% over the past five years. This shows that, while Shree Rama Newsprint is currently loss-making, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Shree Rama Newsprint’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Shree Rama Newsprint may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Shree Rama Newsprint to get a better picture of the stock by looking at: