Today I will take a look at Amara Raja Batteries Limited's (NSEI:AMARAJABAT) most recent earnings update (30 September 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the electrical industry performed. As an investor, I find it beneficial to assess AMARAJABAT’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Did AMARAJABAT's Recent Performance Stack Up Against Its Past?
AMARAJABAT's trailing twelve-month earnings (from 30 September 2019) of ₹6.1b has jumped 28% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.5%, indicating the rate at which AMARAJABAT is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely due to industry tailwinds, or if Amara Raja Batteries has seen some company-specific growth.
In terms of returns from investment, Amara Raja Batteries has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 12% exceeds the IN Electrical industry of 7.1%, indicating Amara Raja Batteries has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Amara Raja Batteries’s debt level, has declined over the past 3 years from 28% to 20%.
What does this mean?
Amara Raja Batteries's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Amara Raja Batteries to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AMARAJABAT’s future growth? Take a look at our free research report of analyst consensus for AMARAJABAT’s outlook.
- Financial Health: Are AMARAJABAT’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 30 September 2019. This may not be consistent with full year annual report figures.
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