Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of BSEL Infrastructure Realty Limited (NSE:BSELINFRA) have had an unfortunate run in the last three years. So they might be feeling emotional about the 64% share price collapse, in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 64% lower in that time. Shareholders have had an even rougher run lately, with the share price down 26% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
We don't think BSEL Infrastructure Realty's revenue of ₹51,188,000 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that BSEL Infrastructure Realty can make progress and gain better traction for the business, before it runs low on cash.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. 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. Some BSEL Infrastructure Realty investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Our data indicates that BSEL Infrastructure Realty had ₹3,941,839,484 more in total liabilities than it had cash, when it last reported in June 2019. That makes it extremely high risk, in our view. But with the share price diving 29% per year, over 3 years, it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how BSEL Infrastructure Realty's cash levels have changed over time (click to see the values). The image below shows how BSEL Infrastructure Realty'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. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
We regret to report that BSEL Infrastructure Realty shareholders are down 64% for the year. Unfortunately, that's worse than the broader market decline of 9.5%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 17% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
For those who like to find winning investments this free list of growing 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 IN exchanges.
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