The Sandesh Limited (NSE:SANDESH): Has Recent Earnings Growth Beaten Long-Term Trend?

After looking at The Sandesh Limited’s (NSE:SANDESH) latest earnings announcement (31 March 2018), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sandesh’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.

Check out our latest analysis for Sandesh

How Well Did SANDESH Perform?

SANDESH’s trailing twelve-month earnings (from 31 March 2018) of ₹828m has jumped 14% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which SANDESH is growing has slowed down. Why could this be happening? Well, let’s examine what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.

NSEI:SANDESH Income Statement, February 26th 2019
NSEI:SANDESH Income Statement, February 26th 2019

In terms of returns from investment, Sandesh has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 11% exceeds the IN Media industry of 8.2%, indicating Sandesh has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sandesh’s debt level, has declined over the past 3 years from 19% to 18%.

What does this mean?

Though Sandesh’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Sandesh to get a more holistic view of the stock by looking at:

  1. Financial Health: Are SANDESH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Valuation: What is SANDESH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SANDESH is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.