The company has consistently outperformed its peers in terms of ROE. Dissecting the ROE we see outperformance in ROA as well while the multiplier effect of Leverage is lower than peers. So focusing on the two components of ROA, we see some dominance in PAT margins relative to peers, while the real outperformance comes from Asset Turnover.
Further dwelling into the asset turnover we see almost 2x outperformance in terms of inventory turnover against IMFA. In terms of DSO (Day of Sales O/S) IMFA’s numbers are unbelievable, while MA’s seem more standard. I do not have the data for the payables comparison.
Coming to margins, MA’s lower tax % hints at an SEZ connection. Would be good to check how much time remains in the tax holiday for their EOU.
We see some positive outliers in terms of SGA/Revenue, Employee Exp./Revenue, and Misc. Exp./Revenue but a big negative outlier in Power Exp./Revenue which results in a very closely comparable OPM between IMFA and MA.
While these businesses are not completely like for like, the differences in the above parameters are somewhat too different to ignore for businesses which are somewhat similar. We need to find the underlying reasons for such outperformance in productivity/efficiency in utilizing inputs such as employees and assets and such underperformance in power expenses.
Sharing this in case you or others can share some more insights into why such differences are there.