After looking at Jai Corp Limited’s (NSEI:JAICORPLTD) latest earnings announcement (31 March 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Jai’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Jai
Was JAICORPLTD weak performance lately part of a long-term decline?
I like to use data from the most recent 12 months, 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 analyze various companies on a more comparable basis, using the latest information. For Jai, its most recent trailing-twelve-month earnings is -₹182.7M, which, in comparison to the prior year’s figure, has become more negative. Given that these values are relatively short-term, I have computed an annualized five-year figure for Jai’s net income, which stands at ₹701.9M.
We can further analyze Jai’s loss by researching what has been happening 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 relatively unexciting, remaining flat on average at 1.03%. Since top-line growth is also pretty stale the key to profitability going forward would be managing cost growth rates. Looking at growth from a sector-level, the IN packaging industry has been growing, albeit, at a muted single-digit rate of 9.71% in the previous twelve months, and a substantial 10.51% over the previous few years. This means that any uplift the industry is benefiting from, Jai has not been able to realize the gains unlike its average peer.
What does this mean?
Jai’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Jai may be facing and whether management guidance has consistently been met in the past. You should continue to research Jai to get a better picture of the stock by looking at:
1. Financial Health: Is JAICORPLTD’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.