There May Be Reason For Hope In GTPL Hathway's (NSE:GTPL) Disappointing Earnings

The market for GTPL Hathway Limited's (NSE:GTPL) shares didn't move much after it posted weak earnings recently. We did some digging, and we believe the earnings are stronger than they seem.

See our latest analysis for GTPL Hathway

The Impact Of Unusual Items On Profit

To properly understand GTPL Hathway's profit results, we need to consider the ₹309m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect GTPL Hathway to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of GTPL Hathway.

Our Take On GTPL Hathway's Profit Performance

Unusual items (expenses) detracted from GTPL Hathway's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that GTPL Hathway's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into GTPL Hathway, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with GTPL Hathway, and understanding these should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of GTPL Hathway's profit. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.