Further weakness as Sadbhav Infrastructure Project (NSE:SADBHIN) drops 10% this week, taking five-year losses to 88%

By
Simply Wall St
Published
February 23, 2022
NSEI:SADBHIN
Source: Shutterstock

Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We don't wish catastrophic capital loss on anyone. For example, we sympathize with anyone who was caught holding Sadbhav Infrastructure Project Limited (NSE:SADBHIN) during the five years that saw its share price drop a whopping 88%. And some of the more recent buyers are probably worried, too, with the stock falling 49% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 23% in thirty days. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Since Sadbhav Infrastructure Project has shed ₹324m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Sadbhav Infrastructure Project

Given that Sadbhav Infrastructure Project 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over half a decade Sadbhav Infrastructure Project reduced its trailing twelve month revenue by 3.5% for each year. While far from catastrophic that is not good. The share price fall of 13% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. We're generally averse to companies with declining revenues, but we're not alone in that. Fear of becoming a 'bagholder' may be keeping people away from this stock.

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

earnings-and-revenue-growth
NSEI:SADBHIN Earnings and Revenue Growth February 23rd 2022

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

A Different Perspective

Investors in Sadbhav Infrastructure Project had a tough year, with a total loss of 49%, against a market gain of about 22%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 13% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sadbhav Infrastructure Project (at least 1 which is significant) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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