Does Debock Industries (NSE:DIL) Deserve A Spot On Your Watchlist?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Debock Industries (NSE:DIL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Debock Industries with the means to add long-term value to shareholders.

Check out our latest analysis for Debock Industries

Debock Industries' Improving Profits

Debock Industries has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Debock Industries' EPS has risen over the last 12 months, growing from ₹3.24 to ₹3.59. That's a 11% gain; respectable growth in the broader scheme of things.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The music to the ears of Debock Industries shareholders is that EBIT margins have grown from 7.5% to 23% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Debock Industries isn't a huge company, given its market capitalisation of ₹1.1b. That makes it extra important to check on its balance sheet strength.

Are Debock Industries 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold ₹46m worth of shares. But that's far less than the ₹175m insiders spent purchasing stock. This adds to the interest in Debock Industries because it suggests that those who understand the company best, are optimistic. We also note that it was the Chairman & MD, Mukesh Singh, who made the biggest single acquisition, paying ₹75m for shares at about ₹6.25 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Debock Industries insiders own more than a third of the company. To be exact, company insiders hold 64% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Of course, Debock Industries is a very small company, with a market cap of only ₹1.1b. That means insiders only have ₹687m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Does Debock Industries Deserve A Spot On Your Watchlist?

One positive for Debock Industries is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. Still, you should learn about the 3 warning signs we've spotted with Debock Industries (including 1 which is potentially serious).

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Debock Industries, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.