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While not a mind-blowing move, it is good to see that the Bank of Maharashtra (NSE:MAHABANK) share price has gained 15% in the last three months. But that is little comfort to those holding over the last half decade, sitting on a big loss. The share price has failed to impress anyone , down a sizable 67% during that time. Some might say the recent bounce is to be expected after such a bad drop. But it could be that the fall was overdone.
See our latest analysis for Bank of Maharashtra
Bank of Maharashtra didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). This state of affairs suggests that venture capitalists won't provide funds on attractive terms. 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. Investors will be hoping that Bank of Maharashtra 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. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Bank of Maharashtra investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Bank of Maharashtra had liabilities exceeding cash by ₹1,427,860,420,000 when it last reported in March 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -20% per year, over 5 years, it looks like some investors think it's time to abandon ship, so to speak. The image below shows how Bank of Maharashtra's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
It's good to see that Bank of Maharashtra has rewarded shareholders with a total shareholder return of 16% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 20% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.