Does Harrisons Malayalam's (NSE:HARRMALAYA) Statutory Profit Adequately Reflect Its Underlying Profit?

Statistically speaking, it is less risky to invest in profitable companies than in unprofitable ones. That said, the current statutory profit is not always a good guide to a company's underlying profitability. This article will consider whether Harrisons Malayalam's (NSE:HARRMALAYA) statutory profits are a good guide to its underlying earnings.

It's good to see that over the last twelve months Harrisons Malayalam made a profit of ₹166.0m on revenue of ₹3.77b.

Check out our latest analysis for Harrisons Malayalam

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Harrisons Malayalam.

Our Take On Harrisons Malayalam's Profit Performance

Therefore, it seems possible to us that Harrisons Malayalam's true underlying earnings power is actually less than its statutory profit. So while earnings quality is important, it's equally important to consider the risks facing Harrisons Malayalam at this point in time. Our analysis shows 3 warning signs for Harrisons Malayalam (1 is a bit concerning!) and we strongly recommend you look at these before investing.

In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. 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 that insiders are buying.

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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. 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.
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