Here's Why We Think Maharashtra Seamless (NSE:MAHSEAMLES) Is Well Worth Watching

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. 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.

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 Maharashtra Seamless (NSE:MAHSEAMLES). 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.

Check out our latest analysis for Maharashtra Seamless

How Quickly Is Maharashtra Seamless Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Shareholders will be happy to know that Maharashtra Seamless' EPS has grown 33% 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. While we note Maharashtra Seamless achieved similar EBIT margins to last year, revenue grew by a solid 58% to ₹55b. That's encouraging news for the company!

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.

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 Maharashtra Seamless' balance sheet strength, before getting too excited.

Are Maharashtra Seamless 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Shareholders in Maharashtra Seamless will be more than happy to see insiders committing themselves to the company, spending ₹48m on shares in just twelve months. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what's to come. We also note that it was the Non-Executive Chairman, Dharam Jindal, who made the biggest single acquisition, paying ₹12m for shares at about ₹342 each.

On top of the insider buying, it's good to see that Maharashtra Seamless insiders have a valuable investment in the business. Holding ₹6.2b worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. At 10% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does Maharashtra Seamless Deserve A Spot On Your Watchlist?

You can't deny that Maharashtra Seamless has grown its earnings per share at a very impressive rate. That's attractive. Furthermore, company insiders have been adding to their significant stake in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. Before you take the next step you should know about the 1 warning sign for Maharashtra Seamless that we have uncovered.

The good news is that Maharashtra Seamless is not the only growth stock with insider buying. Here's a list of them... 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.