You're invited to try out the new version of Value Research Online. Click here to begin:

Companies Reporting Exceptional Items Frequently

High frequency of exceptional items in the income statements of some companies obscures their earnings visibility

  • TweetTweet
  • LinkedinLinkedin
  • FacebookShare

Sometimes exceptional items appear in profit and loss statements of companies. As the name suggests, they are extraordinary transactions or events, other than the operations of a business, which do not occur frequently; for example, losses or a gains from the sale of assets, losses due to fire or losses due to theft. Generally, while analysing a company, exceptional items are skipped because they are expected not to occur again in the future. But we came across some companies which report exceptional items quite frequently. Such companies' net profits or losses are difficult to predict and are very irregular.

Get updates from Value Research in your inbox

The table shows the list of companies which have reported exceptional gains or losses in almost all the past five years. In these companies, exceptional gains or losses make up a significant portion of the net profit or loss. Exceptional items are no more exceptional to the companies enumerated below and hence understanding their future prospects becomes a very difficult task. Exceptional items occur usually when a company has been restructuring itself for over a long period of time, as seen in the case of Suzlon Energy, which has been selling its assets to repay its staggering debt. Secondly, exceptional items also occur frequently when a company has a high revenue exposure to foreign countries as a result of fluctuating currencies, or when it's a commodity-based company like Tata Steel, Southern Petrochemical and MMTC.

Companies with frequent exceptional gains/losses

Company NameTTMFY-14FY-13FY-12FY-11
Tata Steel837-28-739033623046
Shree Renuka Sugars-138-632-29938132
Godrej Industries170691659468
Hindustan Motors91105738651
Indo Rama Synthetics24-100-39-658
Strides Arcolab362-27700491
Jubilant Life Sciences22-214-192-349-41
Suzlon Energy-6126-487-643227-253
Southern Petrochemical10763116124-638
GMR Infrastructure16921820777-162-799
Walchandnagar Industries242442-5-
All amount in Rcrore

Are you missing an opportunity to invest in great stocks at low valuations? There are thousands of listed companies in India and yet only a handful that are worth investing at a particular time and at a particular price.

Our equity team has sifted through hundreds of companies and selected stocks that you should invest in. This list now has 38 stocks on it, and new ones are being added every month. Thousands of our members are using stagnant equity markets to buy great stocks at low prices. Membership of Value Research Stock Advisor is available at a 40% to 60% discount. Learn more and become a member

comments powered by Disqus