Yahoo Finance Interested In SRF Limited (NSE:SRF)? Here’s How It Performed Recently
In this article, I will take a look at SRF Limited’s (NSE:SRF) most recent earnings update (31 March 2018) and compare these latest figures against its performance over the past few years, along with how the rest of SRF’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. View out our latest analysis for SRF
How Did SRF’s Recent Performance Stack Up Against Its Past?
SRF’s trailing twelve-month earnings (from 31 March 2018) of ₹4.62b has declined by -10.35% 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 10.46%, indicating the rate at which SRF is growing has slowed down. What could be happening here? Let’s examine what’s occurring with margins and whether the whole industry is experiencing the hit as well.
Over the past couple of years, revenue growth has fallen behind which implies that SRF’s bottom line has been driven by unsustainable cost-cutting. Eyeballing growth from a sector-level, the IN luxury industry has been growing, albeit, at a muted single-digit rate of 5.65% in the prior year, and a substantial 12.05% over the past five years. This means that any tailwind the industry is deriving benefit from, SRF has not been able to leverage it as much as its industry peers.
In terms of returns from investment, SRF has not invested its equity funds well, leading to a 12.95% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 7.00% exceeds the IN Luxury industry of 6.32%, indicating SRF has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for SRF’s debt level, has increased over the past 3 years from 7.77% to 9.98%.
What does this mean?
SRF’s track record can be a valuable insight into its earnings performance, but it certainly 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 SRF to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SRF’s future growth? Take a look at our free research report of analyst consensus for SRF’s outlook.
Financial Health: Is SRF’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.
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 2018. 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.
