Despite the downward trend in earnings at Tamilnadu Petroproducts (NSE:TNPETRO) the stock spikes 11%, bringing five-year gains to 223%

Simply Wall St · 07/01 00:05

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Tamilnadu Petroproducts Limited (NSE:TNPETRO) stock is up an impressive 187% over the last five years. Also pleasing for shareholders was the 47% gain in the last three months.

Since the stock has added ₹937m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Tamilnadu Petroproducts' earnings per share are down 1.6% per year, despite strong share price performance over five years.

By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 1.2% dividend yield is attracting many buyers to the stock. In contrast revenue growth of 9.4% per year is probably viewed as evidence that Tamilnadu Petroproducts is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NSEI:TNPETRO Earnings and Revenue Growth July 1st 2025

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

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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, Tamilnadu Petroproducts' TSR for the last 5 years was 223%, 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

It's good to see that Tamilnadu Petroproducts has rewarded shareholders with a total shareholder return of 4.3% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 26% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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. For instance, we've identified 3 warning signs for Tamilnadu Petroproducts (2 are concerning) that you should be aware of.

Of course Tamilnadu Petroproducts may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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