Here's Why Abhishek Integrations (NSE:AILIMITED) Has Caught The Eye Of Investors

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Abhishek Integrations (NSE:AILIMITED). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Abhishek Integrations

Abhishek Integrations' Improving Profits

Over the last three years, Abhishek Integrations has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Abhishek Integrations boosted its trailing twelve month EPS from ₹0.90 to ₹1.12, in the last year. There's little doubt shareholders would be happy with that 24% gain.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Abhishek Integrations remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 70% to ₹226m. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since Abhishek Integrations is no giant, with a market capitalisation of ₹222m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Abhishek Integrations Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

A great takeaway for shareholders is that company insiders within Abhishek Integrations have collectively spent ₹470k acquiring shares in the company. While this investment may be modest, it is great considering the lack of insider selling. We also note that it was the Chairman & MD, Sanjay Dubey, who made the biggest single acquisition, paying ₹238k for shares at about ₹19.80 each.

Is Abhishek Integrations Worth Keeping An Eye On?

One important encouraging feature of Abhishek Integrations is that it is growing profits. It's not easy for business to grow EPS, but Abhishek Integrations has shown the strengths to do just that. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. What about risks? Every company has them, and we've spotted 5 warning signs for Abhishek Integrations (of which 4 are a bit unpleasant!) you should know about.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Abhishek Integrations, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.