We think that it’s fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. You won’t get it right every time, but when you do, the returns can be truly splendid. For example, the Mahamaya Steel Industries Limited (NSE:MAHASTEEL) share price is up a whopping 455% in the last three years, a handsome return for long term holders. On top of that, the share price is up 29% in about a quarter.
Since the stock has added ₹784m to its market cap in the past week alone, let’s see if underlying performance has been driving long-term returns.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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.