K.C.P. Sugar and Industries' (NSE:KCPSUGIND) Shareholders May Want To Dig Deeper Than Statutory Profit

K.C.P. Sugar and Industries Corporation Limited's (NSE:KCPSUGIND) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

View our latest analysis for K.C.P. Sugar and Industries

The Impact Of Unusual Items On Profit

For anyone who wants to understand K.C.P. Sugar and Industries' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₹80m 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. We can see that K.C.P. Sugar and Industries' positive unusual items were quite significant relative to its profit in the year to March 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of K.C.P. Sugar and Industries.

Our Take On K.C.P. Sugar and Industries' Profit Performance

As we discussed above, we think the significant positive unusual item makes K.C.P. Sugar and Industries' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that K.C.P. Sugar and Industries' underlying earnings power is lower than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing K.C.P. Sugar and Industries at this point in time. At Simply Wall St, we found 2 warning signs for K.C.P. Sugar and Industries and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of K.C.P. Sugar and Industries' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.