WEBULL

IRB Infrastructure Developers' (NSE:IRB) five-year total shareholder returns outpace the underlying earnings growth

Simply Wall St · 07/26 02:02

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. For example, the IRB Infrastructure Developers Limited (NSE:IRB) share price has soared 285% in the last half decade. Most would be very happy with that. In the last week shares have slid back 3.3%.

In light of the stock dropping 3.3% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

During five years of share price growth, IRB Infrastructure Developers achieved compound earnings per share (EPS) growth of 39% per year. The EPS growth is more impressive than the yearly share price gain of 31% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. The reasonably low P/E ratio of 4.33 also suggests market apprehension.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
NSEI:IRB Earnings Per Share Growth July 26th 2025

We know that IRB Infrastructure Developers has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on IRB Infrastructure Developers' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. We note that for IRB Infrastructure Developers the TSR over the last 5 years was 292%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We regret to report that IRB Infrastructure Developers shareholders are down 30% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 0.4%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 31% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 - IRB Infrastructure Developers has 4 warning signs (and 2 which are potentially serious) we think you should know about.

For those who like to find winning investments this free list of undervalued 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 Indian exchanges.