Last update on 2024-06-07

Indus Holding (INH.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Indus Holding (INH.DE) achieves a Piotroski F-Score of 7/9 in 2023, reflecting strong financial health through profitability, liquidity, and efficiency improvements.

Short Analysis - Piotroski Score: 7

We're running Indus Holding (INH.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

We're evaluating Indus Holding (INH.DE) using the Piotroski F-Score, which measures profitability, liquidity, and leverage. Indus Holding scored 7 out of 9, indicating a strong financial position. The company posted a positive net income of €55,437,000 and a significant positive cash flow from operations at €217,657,000 in 2023. Furthermore, its return on assets improved significantly, and operating cash flow surpassed net income. The company also displayed excellent liquidity with an increasing current ratio. However, an increase in leverage and a stagnant number of shares outstanding showed some weaknesses. Additionally, the asset turnover ratio declined, though the company demonstrated better control over production costs with an increasing gross margin.

Insights for Value Investors Seeking Stable Income

Given its Piotroski F-Score of 7, Indus Holding appears to be a strong investment choice. The company shows solid profitability, robust cash flow from operations, and improved efficiency in financial operations. Despite a slight increase in leverage and some fluctuation in asset turnover, the overall financial health seems positive. The consistent increase in the current ratio and gross margin strengthen this view. Therefore, it is worth considering Indus Holding for potential investment due to its favorable financial metrics and stability.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Indus Holding (INH.DE)

Company has a positive net income?

The criterion checks if the company reported positive net income for the year, reflecting overall profitability.

In 2023, Indus Holding reported a positive net income of €55,437,000. This positive figure earns the company 1 point according to Piotroski’s criteria, which is a good indicator of profitability. Reviewing the historical data, Indus Holding's net income has fluctuated over the last 20 years. They have posted negative net income years twice (in 2019 and 2021), indicating some volatility. However, overall, the long-term trend has remained predominantly positive, making the 2023 outcome a positive continuation.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its regular business operations. Positive cash flow is essential for sustaining and expanding operations.

Indus Holding (INH.DE) has a Cash Flow from Operations (CFO) of EUR 217,657,000 in 2023, which is positive. Historically, the company has demonstrated an upward trajectory in its CFO, with the 2023 figure being the highest in the past 20 years. This positive cash flow suggests robust operational efficiency and strong revenue generation from core business activities. Consequently, this criterion earns the company 1 point, strengthening its financial position and implying lower reliance on external financing for growth.

Return on Assets (ROA) are growing?

ROA (Return on Assets) is a measure of how efficiently a company can manage its assets to produce profits during a period. An increasing ROA indicates improved efficiency and profitability.

Indus Holding (INH.DE) exhibited a remarkable turnaround in its ROA from -0.0225 in 2022 to 0.029 in 2023, marking an improvement of 0.0515 points. This positive shift is a vital indicator of the company’s enhanced profitability and assets utilization. The improvement is particularly impressive given the industry’s median ROA of 0.2782 for the same period. Indus Holding lags the industry, but the upward trajectory places it in a strong position for future competitiveness. It’s noteworthy that their operating cash flow surged from 116,339,000 in 2022 to 217,657,000 in 2023, providing further evidence of stronger financial health.

Operating Cashflow are higher than Netincome?

The criterion checks if the Operating Cash Flow is higher than the Net Income. This is a sign of a company's ability to generate cash from its operations, which is a vital indicator of financial health.

For Indus Holding (INH.DE) in 2023, the Operating Cash Flow is €217,657,000, significantly higher than the Net Income of €55,437,000. This trend is positive and earns a score of 1 point. Reviewing the past 20 years of data, Indus Holding has generally maintained a pattern where Operating Cash Flow often exceeds Net Income, reinforcing the overall positive trend. For instance, in 2022, the Operating Cash Flow was €116,339,000 compared to a Net Income of -€42,235,000, highlighting robust operational cash generation which is crucial for sustainable business operations.

Liquidity of Indus Holding (INH.DE)

Leverage is declining?

Change in leverage reflects how a company's capital structure is evolving which impacts financial risk.

Indus Holding (INH.DE) showed an increase in leverage from 0.3072 in 2022 to 0.3205 in 2023. This upward trend in leverage is considered negative under Piotroski's model as it implies heightened financial risk. Given the additional data revealing historical leverage levels, it is also notable that Indus Holding experienced higher leverage previously, particularly surpassing current levels consistently in the past years except 2021 (0.257). Such fluctuations suggest occasional strategic capital structuring but the recent increase of 2023 still assigns a score of 0 under this criterion.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with short-term assets. It is crucial to assess the company's liquidity position and compare it annually.

The current ratio of Indus Holding increased from 1.82 in 2022 to 1.9559 in 2023, which is a positive sign, earning 1 point for the Piotroski analysis. This trend indicates improved liquidity for 2023. Additionally, Indus Holding's 2023 current ratio of 1.9559 is significantly above the industry median of 1.4575, showcasing the company's stronger short-term financial health compared to its peers. Notably, this is also one of the highest figures for Indus Holding in the past 20 years, reflecting a consistent upward trend since 2008. The historical data underscores this as a positive development.

Number of shares not diluted?

Change in shares outstanding indicates whether a company is issuing new shares or buying back shares from the market. This metric is crucial as it affects earnings per share and the overall valuation of the company.

According to the data, the number of outstanding shares for Indus Holding remained constant at 26,895,559 from 2022 to 2023. Over the past 20 years, the shares outstanding have seen varied changes with a significant rise from 2020 to 2022. This constancy for 2023 does not add a point for this specific criterion, resulting in a score of 0. This static number means the company neither diluted its shares nor repurchased them over the year.

Operating of Indus Holding (INH.DE)

Cross Margin is growing?

This criterion investigates whether a company's gross margin has improved over a period, highlighting its cost-efficiency and pricing strategy. A higher or improving gross margin indicates better control over production costs and stronger pricing power.

In 2023, Indus Holding (INH.DE) reported a gross margin of 0.5489 compared to 0.5351 in 2022, marking an increase. This uptick adds 1 point to its score. Historically, the company's gross margin has shown fluctuations but generally remained above the industry median. For example, in 2010, the gross margin surged to 1.0188. Compared to the industry median of 0.2782 in 2023, Indus Holding's margin reflects strong cost-control and pricing strategies, establishing it as a robust performer in its sector.

Asset Turnover Ratio is growing?

Asset turnover is the ratio of sales to total assets. It assesses how efficiently a company uses its assets to generate sales.

For Indus Holding in 2023, the asset turnover ratio is 0.944 compared to 0.9629 in 2022. This indicates a decrease in asset turnover, suggesting less efficiency in using assets to generate revenue year-over-year. Therefore, we assign 0 points for this criterion. Historical data over the last 20 years show that the company has experienced fluctuations in asset turnover, with ratios ranging from 0.8256 to 1.0974. Such a decrease can raise concerns about the company’s operational efficiency and its capacity to optimize asset usage effectively.