Has Mask Investments Limited (NSE:MASKINVEST) Improved Earnings In Recent Times?

After reading Mask Investments Limited's (NSE:MASKINVEST) latest earnings update (31 March 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether MASKINVEST has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. Check out our latest analysis for Mask Investments

Was MASKINVEST's recent earnings decline worse than the long-term trend and the industry?

MASKINVEST's trailing twelve-month earnings (from 31 March 2018) of ₹1.74m has declined by -20.28% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.12%, indicating the rate at which MASKINVEST is growing has slowed down. Why is this? Let's examine what's transpiring with margins and if the entire industry is facing the same headwind.

Revenue growth over the last few years, has been positive, however, earnings growth has not been able to catch up, meaning Mask Investments has been growing its expenses by a lot more. This harms margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the IN capital markets industry has been growing its average earnings by double-digit 37.63% in the past year, and 17.70% over the previous five years. This growth is a median of profitable companies of 25 Capital Markets companies in IN including Mehta Securities, Network and Kinetic Trust. This means any uplift the industry is deriving benefit from, Mask Investments has not been able to reap as much as its average peer.

In terms of returns from investment, Mask Investments has not invested its equity funds well, leading to a 4.30% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 3.52% exceeds the IN Capital Markets industry of 3.46%, indicating Mask Investments has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Mask Investments’s debt level, has increased over the past 3 years from 4.60% to 5.08%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 55.22% to 19.15% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I suggest you continue to research Mask Investments to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for MASKINVEST’s future growth? Take a look at our free research report of analyst consensus for MASKINVEST’s outlook.
2. Financial Health: Is MASKINVEST’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 2018. This may not be consistent with full year annual report figures.

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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.