Is Now The Time To Put Monarch Networth Capital (NSE:MONARCH) On Your Watchlist?

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Monarch Networth Capital (NSE:MONARCH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Monarch Networth Capital with the means to add long-term value to shareholders.

View our latest analysis for Monarch Networth Capital

Monarch Networth Capital's Improving Profits

In the last three years Monarch Networth Capital's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Monarch Networth Capital's EPS shot up from ₹15.67 to ₹21.42; a result that's bound to keep shareholders happy. That's a fantastic gain of 37%.

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. Our analysis has highlighted that Monarch Networth Capital's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. While we note Monarch Networth Capital achieved similar EBIT margins to last year, revenue grew by a solid 38% to ₹2.0b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Since Monarch Networth Capital is no giant, with a market capitalisation of ₹16b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Monarch Networth Capital 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The real kicker here is that Monarch Networth Capital insiders spent a staggering ₹116m on acquiring shares in just one year, without single share being sold in the meantime. Buying like that is a fantastic look for the company and should rouse the market in anticipation for the future. It is also worth noting that it was MD & Non-Independent Executive Director Vaibhav Shah who made the biggest single purchase, worth ₹68m, paying ₹228 per share.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Monarch Networth Capital will reveal that insiders own a significant piece of the pie. In fact, they own 60% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. To give you an idea, the value of insiders' holdings in the business are valued at ₹9.4b at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Is Monarch Networth Capital Worth Keeping An Eye On?

You can't deny that Monarch Networth Capital has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. Still, you should learn about the 1 warning sign we've spotted with Monarch Networth Capital.

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