If EPS Growth Is Important To You, Motilal Oswal Financial Services (NSE:MOTILALOFS) Presents An Opportunity

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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

View our latest analysis for Motilal Oswal Financial Services

How Quickly Is Motilal Oswal Financial Services 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. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Motilal Oswal Financial Services' EPS has grown 24% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. It's noted that Motilal Oswal Financial Services' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Motilal Oswal Financial Services achieved similar EBIT margins to last year, revenue grew by a solid 67% to ₹60b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Motilal Oswal Financial Services' future profits.

Are Motilal Oswal Financial Services Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So as you can imagine, the fact that Motilal Oswal Financial Services insiders own a significant number of shares certainly is appealing. To be exact, company insiders hold 76% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. This insider holding amounts to That level of investment from insiders is nothing to sneeze at.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Our quick analysis into CEO remuneration would seem to indicate they are. For companies with market capitalisations between ₹167b and ₹535b, like Motilal Oswal Financial Services, the median CEO pay is around ₹48m.

Motilal Oswal Financial Services' CEO took home a total compensation package worth ₹24m in the year leading up to March 2023. That is actually below the median for CEO's of similarly sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Does Motilal Oswal Financial Services Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Motilal Oswal Financial Services' strong EPS growth. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. The overarching message here is that Motilal Oswal Financial Services has underlying strengths that make it worth a look at. We should say that we've discovered 3 warning signs for Motilal Oswal Financial Services (1 is a bit concerning!) that you should be aware of before investing here.

Although Motilal Oswal Financial Services 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.

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