Little Excitement Around Dalmia Bharat Sugar and Industries Limited's (NSE:DALMIASUG) Earnings As Shares Take 25% Pounding

Unfortunately for some shareholders, the Dalmia Bharat Sugar and Industries Limited (NSE:DALMIASUG) share price has dived 25% in the last thirty days, prolonging recent pain. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 19% share price drop.

Although its price has dipped substantially, given about half the companies in India have price-to-earnings ratios (or "P/E's") above 32x, you may still consider Dalmia Bharat Sugar and Industries as a highly attractive investment with its 9.5x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.

While the market has experienced earnings growth lately, Dalmia Bharat Sugar and Industries' earnings have gone into reverse gear, which is not great. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Check out our latest analysis for Dalmia Bharat Sugar and Industries

Keen to find out how analysts think Dalmia Bharat Sugar and Industries' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Dalmia Bharat Sugar and Industries' Growth Trending?

The only time you'd be truly comfortable seeing a P/E as depressed as Dalmia Bharat Sugar and Industries' is when the company's growth is on track to lag the market decidedly.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 9.6%. At least EPS has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Looking ahead now, EPS is anticipated to climb by 7.9% per year during the coming three years according to the sole analyst following the company. That's shaping up to be materially lower than the 20% per year growth forecast for the broader market.

With this information, we can see why Dalmia Bharat Sugar and Industries is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What We Can Learn From Dalmia Bharat Sugar and Industries' P/E?

Having almost fallen off a cliff, Dalmia Bharat Sugar and Industries' share price has pulled its P/E way down as well. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Dalmia Bharat Sugar and Industries maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Dalmia Bharat Sugar and Industries that you need to be mindful of.

If these risks are making you reconsider your opinion on Dalmia Bharat Sugar and Industries, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.