Is Now The Time To Put Jindal Saw (NSE:JINDALSAW) 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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Jindal Saw (NSE:JINDALSAW). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Jindal Saw with the means to add long-term value to shareholders.

Check out our latest analysis for Jindal Saw

Jindal Saw's Improving Profits

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. Which is why EPS growth is looked upon so favourably. It is awe-striking that Jindal Saw's EPS went from ₹12.77 to ₹47.98 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. Could this be a sign that the business has reached an inflection point?

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. The good news is that Jindal Saw is growing revenues, and EBIT margins improved by 5.8 percentage points to 12%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Jindal Saw's future EPS 100% free.

Are Jindal Saw 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Over the last 12 months Jindal Saw insiders spent ₹16m more buying shares than they received from selling them. On balance, that's a good sign. We also note that it was the Group CEO & Whole-Time Director, Neeraj Kumar, who made the biggest single acquisition, paying ₹30m for shares at about ₹514 each.

Along with the insider buying, another encouraging sign for Jindal Saw is that insiders, as a group, have a considerable shareholding. To be specific, they have ₹2.2b worth of shares. That's a lot of money, and no small incentive to work hard. Even though that's only about 1.2% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Should You Add Jindal Saw To Your Watchlist?

Jindal Saw's earnings per share have been soaring, with growth rates sky high. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Jindal Saw deserves timely attention. Still, you should learn about the 2 warning signs we've spotted with Jindal Saw (including 1 which is significant).

The good news is that Jindal Saw is not the only growth stock with insider buying. Here's a list of growth-focused companies in IN 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.

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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.