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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Radico Khaitan Limited’s (NSEI:RADICO) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. View our latest analysis for Radico Khaitan

Could RADICO beat the long-term trend and outperform its industry?

For the most up-to-date info, I 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 different stocks on a similar basis, using new information. For Radico Khaitan, its latest trailing-twelve-month earnings is IN₨807.11M, which compared to last year’s level, has grown by a somewhat unexciting 3.28%. Given that these figures are somewhat myopic, I have computed an annualized five-year figure for Radico Khaitan’s earnings, which stands at IN₨731.49M This means that, generally, Radico Khaitan has been able to gradually grow its earnings over the past couple of years as well.

What’s the driver of this growth? Let’s see whether it is solely attributable to industry tailwinds, or if Radico Khaitan has experienced some company-specific growth. The ascend in earnings seems to be bolstered by a strong top-line increase outpacing its growth rate of costs. Though this has led to a margin contraction, it has made Radico Khaitan more profitable. Eyeballing growth from a sector-level, the IN beverage industry has been growing, albeit, at a unexciting single-digit rate of 7.81% in the past year, and a flatter 1.67% over the past five. This suggests that whatever tailwind the industry is enjoying, Radico Khaitan has not been able to reap as much as its industry peers.

What does this mean?

Though Radico Khaitan’s past data is helpful, it is only one aspect of my investment thesis. While Radico Khaitan has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Radico Khaitan to get a better picture of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for RADICO’s future growth? Take a look at our free research report of analyst consensus for RADICO’s outlook.

• 2. Financial Health: Is RADICO’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.

• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.