Do Quarterly Results Matter ?
Most of us know that the Financial resutls of a co matter. But it may not always be the case depending on the investment frame. I’d like to summarize my recent experiences in this regard:
Company | What happened | My assessment |
---|---|---|
MCX | Quarterly Profit is depressed because of high Software Charges | These higher charges won’t be there (most probably) after Q3 FY24. I ignored the net profit and looked just at the revenue growth |
XPRO India | Resutls are down YOY | My thesis is 2-3 years down the lline when the Capacitor film capex starts ramping up. Current quarter financial resutls doesn’t matter. But If there’s any challenges in commercializing the capex, it’s a problem |
SRF | Revenue and profit down both QOQ and YOY | Inventory rationalization lead to degrowth. Once the inventory at the customer/distributor level is consumed, orders should come in |
Kernex Micro systems | Resutls not announced yet | My thesis is the huge order inflow for TCAS players (only 3 players currently) which would happen in next 1 year. But execution needs to be seen, so I want to see that co convert orders (550 cr worth to be executed by Sep-2024) to revenues and show profits |
My Key Take aways:
- While financial results are important, the level of importance depends on the timeframe of your investment thesis
- One time hit to a co’s P&L may lead to fall in stock price. It might be an opportunity for an investor if the thesis is still intact in his time frame
- But if the recent events (hit to P&L) reveal new permanent risks, and reveal that the quality of the co. is poorer than we considered, then it may change my expectations from the co. and re-evaluate the investment decision
Disc: No reco by any means. Just for educational purpose
Any points, examples supporting or opposing the above views are most welcome
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