Should You Use Sanghi Industries's (NSE:SANGHIIND) Statutory Earnings To Analyse It?

Simply Wall St
December 21, 2020

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. This article will consider whether Sanghi Industries' (NSE:SANGHIIND) statutory profits are a good guide to its underlying earnings.

We like the fact that Sanghi Industries made a profit of ₹309.2m on its revenue of ₹7.29b, in the last year. In the last few years both its revenue and its profit have fallen, as you can see in the chart below.

See our latest analysis for Sanghi Industries

NSEI:SANGHIIND Earnings and Revenue History December 22nd 2020

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sanghi Industries.

Our Take On Sanghi Industries' Profit Performance

Because of this, we think that it may be that Sanghi Industries' statutory profits are better than its underlying earnings power. If you'd like to know more about Sanghi Industries as a business, it's important to be aware of any risks it's facing. For example, Sanghi Industries has 2 warning signs (and 1 which is significant) we think you should know about.

Our examination of Sanghi Industries has focussed on certain factors that can make its earnings look better than they are. 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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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