After reading Harita Seating Systems Limited’s (NSEI:HARITASEAT) most recent earnings announcement (31 March 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 Harita Seating Systems’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for Harita Seating Systems

Were HARITASEAT’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 blend enables me to analyze many different companies on a more comparable basis, using the latest information. For Harita Seating Systems, its most recent earnings (trailing twelve month) is ₹288.41M, which compared to the prior year’s level, has climbed up by 11.24%. Given that these figures may be fairly myopic, I’ve determined an annualized five-year figure for HARITASEAT’s earnings, which stands at ₹135.86M This shows that, on average, Harita Seating Systems has been able to gradually raise its bottom line over the last couple of years as well.

What’s enabled this growth? Well, let’s take a look at whether it is only because of industry tailwinds, or if Harita Seating Systems has seen some company-specific growth. Over the last couple of years, Harita Seating Systems increased its bottom line faster than revenue by efficiently controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the IN auto components industry has been growing its average earnings by double-digit 11.93% over the previous year, and 11.13% over the past five years. This suggests that any uplift the industry is profiting from, Harita Seating Systems has not been able to leverage it as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Harita Seating Systems to get a more holistic view of the stock by looking at: