The last three months have been tough on Gangotri Textiles Limited (NSE:GANGOTRI) shareholders, who have seen the share price decline a rather worrying 31%. But over the last year the share price has taken off like one of Elon Musk's rockets. In fact, it is up 2400% in that time. So the recent fall isn't enough to negate the good performance. While winners often keep winning, it can pay to be cautious after a strong rise.

Anyone who held for that rewarding ride would probably be keen to talk about it.

Check out our latest analysis for Gangotri Textiles

We don't think Gangotri Textiles's revenue of ₹742,802 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Gangotri Textiles 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. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Gangotri Textiles has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Gangotri Textiles had net debt of ₹2,516,324,909 when it last reported in March 2019, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 2400% in the last year, but we're happy for holders. It's clear more than a few people believe in the potential. You can see in the image below, how Gangotri Textiles's cash and debt levels have changed over time (click to see the values).

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.

A Different Perspective

We're pleased to report that Gangotri Textiles shareholders have received a total shareholder return of 2400% over one year. That gain is better than the annual TSR over five years, which is 9.3%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. You could get a better understanding of Gangotri Textiles's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.