Even though Indo Rama Synthetics (India) (NSE:INDORAMA) has lost ₹1.9b market cap in last 7 days, shareholders are still up 55% over 5 years

Indo Rama Synthetics (India) Limited (NSE:INDORAMA) shareholders have seen the share price descend 18% over the month. But at least the stock is up over the last five years. In that time, it is up 55%, which isn't bad, but is below the market return of 183%. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 25% decline over the last twelve months.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Indo Rama Synthetics (India)

Indo Rama Synthetics (India) isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last 5 years Indo Rama Synthetics (India) saw its revenue grow at 19% per year. Even measured against other revenue-focussed companies, that's a good result. While long-term shareholders have made money, the 9% per year gain over five years fall short of the market return. You could argue the market is still pretty skeptical, given the growing revenues. It could be that the stock was previously over-priced - but if you're looking for underappreciated growth stocks, these numbers indicate that there might be an opportunity here.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Indo Rama Synthetics (India)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 44% in the last year, Indo Rama Synthetics (India) shareholders lost 25%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Indo Rama Synthetics (India) you should be aware of, and 1 of them makes us a bit uncomfortable.

Of course Indo Rama Synthetics (India) may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.