Yahoo Finance Investors bid Tirupati Graphite (LON:TGR) up UK£6.9m despite increasing losses YoY, taking one-year return to 14%
It hasn't been the best quarter for Tirupati Graphite plc (LON:TGR) shareholders, since the share price has fallen 22% in that time. Taking a longer term view we see the stock is up over one year. But to be blunt its return of 14% fall short of what you could have got from an index fund (around 16%).
Since the stock has added UK£6.9m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for Tirupati Graphite
We don't think Tirupati Graphite's revenue of UK£1,264,082 is enough to establish significant demand. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Tirupati Graphite will find or develop a valuable new mine before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.
Tirupati Graphite had cash in excess of all liabilities of just UK£5.0m when it last reported (September 2021). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. It's a testament to the popularity of the business plan that the share price gained 155% in the last year , despite the weak balance sheet. The image below shows how Tirupati Graphite's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
We're happy to report that Tirupati Graphite are up 14% over the year. The bad news is that's no better than the average market return, which was roughly 16%. Unfortunately the share price is down 22% over the last quarter. It may simply be that the share price got ahead of itself, and its quite possible it will keep moving in the right direction, especially if the business continues to deliver good financial results. 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. Take risks, for example - Tirupati Graphite has 6 warning signs (and 2 which can't be ignored) we think you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.
