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Assessing Dalmia Bharat Sugar and Industries Limited’s (NSE:DALMIASUG) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Dalmia Bharat Sugar and Industries is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its food industry peers. See our latest analysis for Dalmia Bharat Sugar and Industries
Was DALMIASUG’s weak performance lately a part of a long-term decline?
DALMIASUG’s trailing twelve-month earnings (from 31 March 2018) of ₹1.22b has declined by -32.87% 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 48.31%, indicating the rate at which DALMIASUG is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is facing the same headwind.
In the past few years, revenue growth has fallen behind which implies that Dalmia Bharat Sugar and Industries’s bottom line has been driven by unmaintainable cost-cutting. Inspecting growth from a sector-level, the IN food industry has been growing, albeit, at a muted single-digit rate of 8.77% over the prior year, and a substantial 16.10% over the last five years. This suggests that any tailwind the industry is deriving benefit from, Dalmia Bharat Sugar and Industries has not been able to leverage it as much as its average peer.
In terms of returns from investment, Dalmia Bharat Sugar and Industries has not invested its equity funds well, leading to a 8.13% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.58% is below the IN Food industry of 6.96%, indicating Dalmia Bharat Sugar and Industries’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Dalmia Bharat Sugar and Industries’s debt level, has increased over the past 3 years from -0.46% to 6.71%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 171.32% to 47.91% over the past 5 years.
What does this mean?
Though Dalmia Bharat Sugar and Industries’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Dalmia Bharat Sugar and Industries to get a more holistic view of the stock by looking at: