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Assessing Brigade Enterprises Limited’s (NSE:BRIGADE) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BRIGADE’s recent performance announced on 31 March 2018 and evaluate these figures to its longer term trend and industry movements. See our latest analysis for Brigade Enterprises
Did BRIGADE perform worse than its track record and industry?
BRIGADE’s trailing twelve-month earnings (from 31 March 2018) of ₹1.39b has declined by -9.07% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 16.37%, indicating the rate at which BRIGADE is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and whether the rest of the industry is experiencing the hit as well.
Revenue growth over the past few years, has been positive, however, earnings growth has been lagging behind meaning Brigade Enterprises has been increasing its expenses by a lot more. This hurts margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the IN real estate industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -5.67%. This is a significant change, given that the industry has been delivering a positive rate of 9.93%, on average, over the past half a decade. This suggests that any recent headwind the industry is experiencing, it’s hitting Brigade Enterprises harder than its peers.
In terms of returns from investment, Brigade Enterprises has not invested its equity funds well, leading to a 5.29% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 5.10% exceeds the IN Real Estate industry of 3.83%, indicating Brigade Enterprises has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Brigade Enterprises’s debt level, has declined over the past 3 years from 7.14% to 3.87%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 86.62% to 146.50% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I recommend you continue to research Brigade Enterprises to get a more holistic view of the stock by looking at: