When Kavveri Telecom Products Limited (NSEI:KAVVERITEL) released its most recent earnings update (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Kavveri Telecom Products’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not KAVVERITEL actually performed well. Below is a quick commentary on how I see KAVVERITEL has performed. View our latest analysis for Kavveri Telecom Products
Commentary On KAVVERITEL’s Past Performance
I look at 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 technique allows me to analyze many different companies on a similar basis, using the most relevant data points. For Kavveri Telecom Products, the most recent earnings -₹269.6M, which compared to the previous year’s figure, has become less negative. Since these figures are fairly myopic, I’ve calculated an annualized five-year figure for Kavveri Telecom Products’s earnings, which stands at -₹243.7M. This shows that, Kavveri Telecom Products has historically performed better than recently, although it seems like earnings are now heading back towards to right direction again.
Additionally, we can evaluate Kavveri Telecom Products’s loss by looking at 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 past few years has been negative at -49.63%. 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 communications equipment industry has been growing, albeit, at a unexciting single-digit rate of 3.48% over the previous year, and a substantial 16.98% over the past five years. This means any near-term headwind the industry is enduring, the impact on Kavveri Telecom Products has been softer relative to its peers.
What does this mean?
Though Kavveri Telecom Products’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Kavveri Telecom Products may be facing and whether management guidance has regularly been met in the past. You should continue to research Kavveri Telecom Products to get a more holistic view of the stock by looking at: