Indo Rama Synthetics (India) (NSE:INDORAMA) Share Prices Have Dropped 40% In The Last Year

It is doubtless a positive to see that the Indo Rama Synthetics (India) Limited (NSE:INDORAMA) share price has gained some 48% in the last three months. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 40% in the last year, well below the market return.

See our latest analysis for Indo Rama Synthetics (India)

Given that Indo Rama Synthetics (India) didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Indo Rama Synthetics (India)'s revenue didn't grow at all in the last year. In fact, it fell 8.9%. That's not what investors generally want to see. The stock price has languished lately, falling 40% in a year. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Indo Rama Synthetics (India) shareholders are down 40% for the year, but the market itself is up 7.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5.8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for Indo Rama Synthetics (India) (2 shouldn't be ignored!) that you should be aware of before investing here.

But note: Indo Rama Synthetics (India) may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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