Is Technocraft Industries (India) Limited's (NSE:TIIL) CEO Being Overpaid?

Navneet Saraf became the CEO of Technocraft Industries (India) Limited (NSE:TIIL) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Technocraft Industries (India)

How Does Navneet Saraf's Compensation Compare With Similar Sized Companies?

Our data indicates that Technocraft Industries (India) Limited is worth ₹5.2b, and total annual CEO compensation was reported as ₹15m for the year to March 2019. Notably, the salary of ₹15m is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below ₹15b, and calculated the median CEO total compensation to be ₹3.6m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 88% of total compensation represents salary and 12% is other remuneration. On a company level, Technocraft Industries (India) prefers to reward its CEO through a salary, opting not to pay Navneet Saraf through non-salary benefits.

Thus we can conclude that Navneet Saraf receives more in total compensation than the median of a group of companies in the same market, and of similar size to Technocraft Industries (India) Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Technocraft Industries (India) has changed over time.

Is Technocraft Industries (India) Limited Growing?

On average over the last three years, Technocraft Industries (India) Limited has seen earnings per share (EPS) move in a favourable direction by 6.7% each year (using a line of best fit). It achieved revenue growth of 6.0% over the last year.

I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors I'd say performance has been pretty decent, though not amazing. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Technocraft Industries (India) Limited Been A Good Investment?

With a three year total loss of 56%, Technocraft Industries (India) Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by Technocraft Industries (India) Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Technocraft Industries (India) (1 is concerning!) that you should be aware of before investing here.

Important note: Technocraft Industries (India) may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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