Here's Why We Think Dalmia Bharat Sugar and Industries (NSE:DALMIASUG) Might Deserve Your Attention Today

Published
July 13, 2022
NSEI:DALMIASUG
Source: Shutterstock

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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Dalmia Bharat Sugar and Industries (NSE:DALMIASUG). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Dalmia Bharat Sugar and Industries

How Fast Is Dalmia Bharat Sugar and Industries Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that Dalmia Bharat Sugar and Industries has managed to grow EPS by 19% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. On the revenue front, Dalmia Bharat Sugar and Industries has done well over the past year, growing revenue by 12% to ₹30b but EBIT margin figures were less stellar, seeing a decline over the last 12 months. If EBIT margins are able to stay balanced and this revenue growth continues, then we should see brighter days ahead.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
NSEI:DALMIASUG Earnings and Revenue History July 13th 2022

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Dalmia Bharat Sugar and Industries' balance sheet strength, before getting too excited.

Are Dalmia Bharat Sugar and Industries Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Dalmia Bharat Sugar and Industries insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at ₹1.8b. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 6.3% of the shares on issue for the business, an appreciable amount considering the market cap.

Is Dalmia Bharat Sugar and Industries Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Dalmia Bharat Sugar and Industries' strong EPS growth. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. Before you take the next step you should know about the 2 warning signs for Dalmia Bharat Sugar and Industries that we have uncovered.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether Dalmia Bharat Sugar and Industries is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis