Tourism Finance Corporation of India (NSE:TFCILTD) Ticks All The Boxes When It Comes To Earnings Growth

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Tourism Finance Corporation of India (NSE:TFCILTD). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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Tourism Finance Corporation of India's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. It's good to see that Tourism Finance Corporation of India's EPS has grown from ₹10.08 to ₹11.21 over twelve months. This amounts to a 11% gain; a figure that shareholders will be pleased to see.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. It's noted that Tourism Finance Corporation of India's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Tourism Finance Corporation of India maintained stable EBIT margins over the last year, all while growing revenue 14% to ₹1.5b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Check out our latest analysis for Tourism Finance Corporation of India

Tourism Finance Corporation of India isn't a huge company, given its market capitalisation of ₹24b. That makes it extra important to check on its balance sheet strength.

Are Tourism Finance Corporation of India Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Tourism Finance Corporation of India is that one insider has illustrated their belief in the company's future with a huge purchase of shares in the last 12 months. Specifically, in one large transaction Non-Executive Director Aditya Halwasiya paid ₹90m, for stock at ₹180 per share. Big insider buys like that are a rarity and should prompt discussion on the merits of the business.

The good news, alongside the insider buying, for Tourism Finance Corporation of India bulls is that insiders (collectively) have a meaningful investment in the stock. With a whopping ₹7.1b worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 29% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.

While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Anoop Bali, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to Tourism Finance Corporation of India, with market caps between ₹8.5b and ₹34b, is around ₹16m.

The Tourism Finance Corporation of India CEO received ₹13m in compensation for the year ending March 2024. That comes in below the average for similar sized companies and seems pretty reasonable. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is Tourism Finance Corporation of India Worth Keeping An Eye On?

As previously touched on, Tourism Finance Corporation of India is a growing business, which is encouraging. In addition, insiders have been busy adding to their sizeable holdings in the company. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. We should say that we've discovered 2 warning signs for Tourism Finance Corporation of India (1 can't be ignored!) that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Tourism Finance Corporation of India, you'll probably love this curated collection of companies in IN that have an attractive valuation alongside insider buying in the last three months.

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.