Construction Industry News
India Cements Limited (NSE: INDIACEM) share price is down 15% in the last quarter, yet returns over the past three years have been pleasing.
In light of the stock's 6.4% decline over the past week, it's important to examine the longer-term story and see if fundamentals are driving the company's positive three-year return.
One way to examine how market sentiment has changed over time is to look at the interaction between a company's stock price and its earnings per share (EPS). India Cements was able to increase its earnings per share by 88% a year in three years, driving its share price soaring. The average annual price increase of 25% is lower than the growth of the EPS.
It's nice to see how India Cements has increased profits over the years, but the future is more important for shareholders.
India Cements' thermal substitution rate (TSR) has been at 101% over the past three years, which is higher than the previously quoted share price return. The dividends paid by the company have increased the total shareholder return.
India Cements delivered a TSR of 19% over the past twelve months, but that return has lagged the market. On the plus side, that's still a gain, and it's definitely more profitable than the annual loss of about 1.0% for half a decade.
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