In this commentary, I will examine Surana Corporation Limited’s (NSEI:SURANACORP) latest earnings update (30 September 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the luxury industry performed. As an investor, I find it beneficial to assess SURANACORP’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Surana
Was SURANACORP weak performance lately part of a long-term decline?
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 allows me to examine different stocks on a more comparable basis, using new information. For Surana, the most recent bottom-line -₹6,271.1M, which, against last year’s figure, has become more negative. Since these figures are somewhat myopic, I have calculated an annualized five-year value for SURANACORP’s net income, which stands at -₹1,791.0M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.
Additionally, we can assess Surana’s loss by researching what has been happening in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -33.31%. The key to profitability here is to make sure the company’s cost growth is well-managed. Looking at growth from a sector-level, the IN luxury industry has been growing, albeit, at a subdued single-digit rate of 3.81% in the past twelve months, and 5.76% over the past couple of years. This means that whatever recent headwind the industry is facing, it’s hitting Surana harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Surana may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Surana to get a more holistic view of the stock by looking at:
1. Financial Health: Is SURANACORP’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.