Year ending and half yearly results communicate way more information than 1st and 3rd quarter results.
This is so because companies share their balance sheets and there’s so much more to interpret from balance sheets and annual reports.
Off-late, we have been reading Annual Reports of several small capital goods companies and have noticed some interesting points from the balance sheets:
Source: Katalyst Wealth Research
- Good jump in inventory at the end of Mar’19 despite strong sales in Q4,
- decent increase in advances from customers and
- a lot of them have expanded capacities in last 2-3 years
Normally, the inventory secured by such companies is order backed and looking at the substantial increase in inventory, despite decent sales in Mar’19 quarter, it seems the companies have very decent order books and the sales numbers for FY 20 could be really good.
Another inference that may be drawn is that probably the capital expenditure is improving and industries are looking to build capacities; however, as the sample size of our research is too small, we are not attributing much importance to the same.
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