Technocraft Industries (India)'s (NSE:TIIL) Problems Go Beyond Weak Profit

The market wasn't impressed with the soft earnings from Technocraft Industries (India) Limited (NSE:TIIL) recently. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

View our latest analysis for Technocraft Industries (India)

The Impact Of Unusual Items On Profit

For anyone who wants to understand Technocraft Industries (India)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₹379m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. If Technocraft Industries (India) doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Technocraft Industries (India).

Our Take On Technocraft Industries (India)'s Profit Performance

Arguably, Technocraft Industries (India)'s statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Technocraft Industries (India)'s statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 29% over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. While it's very important to consider the profit and loss statement, you can also learn a lot about a company by looking at its balance sheet. We've done some analysis and you can see our take on Technocraft Industries (India)'s balance sheet by clicking here.

Today we've zoomed in on a single data point to better understand the nature of Technocraft Industries (India)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.