Thirumalai Chemicals (NSE:TIRUMALCHM) delivers shareholders incredible 37% CAGR over 5 years, surging 11% in the last week alone

Some Thirumalai Chemicals Limited (NSE:TIRUMALCHM) shareholders are probably rather concerned to see the share price fall 38% over the last three months. But over five years returns have been remarkably great. In fact, during that period, the share price climbed 371%. Impressive! So it might be that some shareholders are taking profits after good performance. Only time will tell if there is still too much optimism currently reflected in the share price.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Thirumalai Chemicals

Thirumalai Chemicals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 5 years Thirumalai Chemicals saw its revenue grow at 16% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 36% per year in that time. Despite the strong run, top performers like Thirumalai Chemicals have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Thirumalai Chemicals stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Thirumalai Chemicals' TSR for the last 5 years was 388%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While it's certainly disappointing to see that Thirumalai Chemicals shares lost 1.5% throughout the year, that wasn't as bad as the market loss of 2.1%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 37% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Thirumalai Chemicals better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Thirumalai Chemicals (of which 3 shouldn't be ignored!) you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.