I Ran A Stock Scan For Earnings Growth And IndiaMART InterMESH (NSE:INDIAMART) Passed With Ease

By
Simply Wall St
Published
September 12, 2021
NSEI:INDIAMART
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in IndiaMART InterMESH (NSE:INDIAMART). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for IndiaMART InterMESH

How Fast Is IndiaMART InterMESH Growing Its Earnings Per Share?

In the last three years IndiaMART InterMESH's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, IndiaMART InterMESH's EPS soared from ₹65.49 to ₹99.69, in just one year. That's a impressive gain of 52%.

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. IndiaMART InterMESH shareholders can take confidence from the fact that EBIT margins are up from 29% to 47%, and revenue is growing. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
NSEI:INDIAMART Earnings and Revenue History September 13th 2021

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of IndiaMART InterMESH's forecast profits?

Are IndiaMART InterMESH Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So we're pleased to report that IndiaMART InterMESH insiders own a meaningful share of the business. In fact, they own 55% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes me think they will be incentivised to plan for the long term - something I like to see. At the current share price, that insider holding is worth a whopping ₹150b. Now that's what I call some serious skin in the game!

Is IndiaMART InterMESH Worth Keeping An Eye On?

Given my belief that share price follows earnings per share you can easily imagine how I feel about IndiaMART InterMESH's strong EPS growth. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for IndiaMART InterMESH that you should be aware of.

Although IndiaMART InterMESH certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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

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