When S H Kelkar and Company Limited (NSE:SHK) released its most recent earnings update (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well S H Kelkar has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see SHK has performed.

View our latest analysis for S H Kelkar

Despite a decline, did SHK underperform the long-term trend and the industry?

SHK's trailing twelve-month earnings (from 31 March 2019) of ₹885m has declined by -5.8% 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 6.7%, indicating the rate at which SHK is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and if the whole industry is feeling the heat.

In terms of returns from investment, S H Kelkar has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 6.9% is below the IN Chemicals industry of 8.7%, indicating S H Kelkar's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for S H Kelkar’s debt level, has declined over the past 3 years from 16% to 15%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research S H Kelkar to get a more holistic view of the stock by looking at:

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

2. Financial Health: Are SHK’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 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.