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Does UltraTech Cement Limited's (NSE:ULTRACEMCO) Recent Track Record Look Strong?

Simply Wall St

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After reading UltraTech Cement Limited's (NSE:ULTRACEMCO) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether UltraTech Cement's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

See our latest analysis for UltraTech Cement

Did ULTRACEMCO beat its long-term earnings growth trend and its industry?

ULTRACEMCO's trailing twelve-month earnings (from 31 March 2019) of ₹24b has increased by 9.6% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.3%, indicating the rate at which ULTRACEMCO is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is only attributable to industry tailwinds, or if UltraTech Cement has experienced some company-specific growth.

NSEI:ULTRACEMCO Income Statement, May 10th 2019

In terms of returns from investment, UltraTech Cement has fallen short of achieving a 20% return on equity (ROE), recording 8.6% instead. However, its return on assets (ROA) of 6.2% exceeds the IN Basic Materials industry of 5.8%, indicating UltraTech Cement has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for UltraTech Cement’s debt level, has declined over the past 3 years from 12% to 9.0%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 43% to 78% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While UltraTech Cement 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 UltraTech Cement to get a more holistic view of the stock by looking at:

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