What Do Analysts Think About Ahluwalia Contracts (India) Limited's (BOM:532811) Profit Margin?

As analysts expect Ahluwalia Contracts (India) Limited (BOM:532811) to register robust earnings growth of 29.57% in the coming 12 months, let's stop and think through this strong vision. Investors should consider the forces that are driving this growth, as there are certain implications that can impact on shareholder return. To help investors get a top level understanding, I will try to evaluate Ahluwalia Contracts (India)'s margin behaviour so investors can evaluate the revenue and cost drivers behind future earnings projections and understand how they may impact on returns compared to the industry.

What can we tell from 532811's profit margin?

Attractive margins generally indicate a desirable ability to translate sales revenue in to earnings, and return for shareholders. 532811's profit margin will help us understand the extent of this ability, as well as identify the forces behind earnings expectations.

The past five years have seen Ahluwalia Contracts (India)'s margin expand, with 44.09% in average net income growth outstripping average revenue growth of 2.39%, which means that the previous increase in revenue has coincided with a larger portion falling to the bottom line. 532811's most recent margin of 7.01% appears to follow this trend, indicating that earnings growth has likely been driven through improved cost management alongside the benefits of revenue growth.

What does Ahluwalia Contracts (India)'s margin expectation tell us about future earnings?

Forward looking projections suggest margins will keep on expanding, with annual revenue growth tipped at 17.41% and 22.18% earnings growth expected annually. This suggests future earnings growth is driven further by enhanced cost efficiency alongside revenue increases, which is enlarging the incremental amount of net income that is retained from the forecasted revenue growth. Despite this, investors should realise a expanding margin can hold various implications on the company's performance depending on how it operates, which makes further research very important.

Next Steps:

For 532811, I've compiled three fundamental aspects you should further examine:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is 532811 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 532811 is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of 532811? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.