Should Indo Rama Synthetics (India) (NSE:INDORAMA) Be Disappointed With Their 32% Profit?

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Indo Rama Synthetics (India) Limited (NSE:INDORAMA) share price is up 32% in the last year, clearly besting the market return of around 14% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 15% in the last three years.

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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Indo Rama Synthetics (India) actually shrunk its revenue over the last year, with a reduction of 21%. The stock is up 32% in that time, a fine performance given the revenue drop. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

You can see below how earnings and revenue have changed over time (discover 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

It's nice to see that Indo Rama Synthetics (India) shareholders have received a total shareholder return of 32% over the last year. That's better than the annualised return of 2% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For instance, we've identified 2 warning signs for Indo Rama Synthetics (India) (1 is potentially serious) that you should be aware of.

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 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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