When SS Infrastructure Development Consultants Limited (NSE:SSINFRA) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how S.S. Infrastructure Development Consultants performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see SSINFRA has performed.
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Were SSINFRA’s earnings stronger than its past performances and the industry?
SSINFRA’s trailing twelve-month earnings (from 31 March 2018) of ₹52.5m has jumped 38.2% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 14.6%, indicating the rate at which SSINFRA is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is solely attributable to industry tailwinds, or if S.S. Infrastructure Development Consultants has seen some company-specific growth.
In the past couple of years, S.S. Infrastructure Development Consultants grew its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time.
Scanning growth from a sector-level, the IN construction industry has been growing its average earnings by double-digit 38.2% over the past year, and a more subdued 9.9% over the past five years. This growth is a median of profitable companies of 25 Construction companies in IN including Artson Engineering, India Infraspace and SAB Industries.
In terms of returns from investment, S.S. Infrastructure Development Consultants has fallen short of achieving a 20% return on equity (ROE), recording 19.6% instead. However, its return on assets (ROA) of 15.4% exceeds the IN Construction industry of 5.3%, indicating S.S. Infrastructure Development Consultants has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for S.S. Infrastructure Development Consultants’s debt level, has declined over the past 3 years from 45.7% to 24.4%.
What does this mean?
S.S. Infrastructure Development Consultants’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as S.S. Infrastructure Development Consultants gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research S.S. Infrastructure Development Consultants to get a more holistic view of the stock by looking at: