With EPS Growth And More, Titan (NSE:TITAN) Makes An Interesting Case

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Titan (NSE:TITAN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Titan with the means to add long-term value to shareholders.

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How Quickly Is Titan Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Titan managed to grow EPS by 7.9% per year, over three years. While that sort of growth rate isn't anything to write home about, it does show the business is growing.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Titan maintained stable EBIT margins over the last year, all while growing revenue 21% to ₹637b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

See our latest analysis for Titan

Fortunately, we've got access to analyst forecasts of Titan's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Titan Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a ₹3.2t company like Titan. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth ₹166b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Should You Add Titan To Your Watchlist?

One important encouraging feature of Titan is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. You should always think about risks though. Case in point, we've spotted 2 warning signs for Titan you should be aware of, and 1 of them is a bit unpleasant.

Although Titan certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

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.