Should You Be Adding V.I.P. Industries (NSE:VIPIND) To Your Watchlist Today?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like V.I.P. Industries (NSE:VIPIND), which has not only revenues, but also profits. 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 V.I.P. Industries

How Quickly Is V.I.P. Industries Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years V.I.P. Industries grew its EPS by 11% per year. That's a good rate of growth, if it can be sustained.

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. The music to the ears of V.I.P. Industries shareholders is that EBIT margins have grown from -0.3% to 11% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

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

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

Are V.I.P. Industries Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

One gleaming positive for V.I.P. Industries, in the last year, is that a certain insider has buying shares with ample enthusiasm. Indeed, Non-Executive Chairman Dilip Piramal has accumulated shares over the last year, paying a total of ₹137m at an average price of about ₹718. It doesn't get much better than that, in terms of large investments from insiders.

It's reassuring that V.I.P. Industries insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. To be specific, the CEO is paid modestly when compared to company peers of the same size. Our analysis has discovered that the median total compensation for the CEOs of companies like V.I.P. Industries with market caps between ₹83b and ₹265b is about ₹51m.

V.I.P. Industries offered total compensation worth ₹41m to its CEO in the year to March 2022. That is actually below the median for CEO's of similarly sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add V.I.P. Industries To Your Watchlist?

As previously touched on, V.I.P. Industries is a growing business, which is encouraging. And there's more to love too, with modest CEO remuneration and insider buying interest continuing the positives for the company. If these factors aren't enough to secure V.I.P. Industries a spot on the watchlist, then it certainly warrants a closer look at the very least. However, before you get too excited we've discovered 2 warning signs for V.I.P. Industries that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of V.I.P. 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.

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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.