Does Max Ventures and Industries (NSE:MAXVIL) Deserve A Spot On Your Watchlist?

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like Max Ventures and Industries (NSE:MAXVIL), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Max Ventures and Industries

Max Ventures and Industries's Improving Profits

In the last three years Max Ventures and Industries's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a falcon taking flight, Max Ventures and Industries's EPS soared from ₹1.19 to ₹1.84, over the last year. That's a impressive gain of 54%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Max Ventures and Industries shareholders can take confidence from the fact that EBIT margins are up from 9.8% to 16%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Max Ventures and Industries isn't a huge company, given its market capitalization of ₹19b. That makes it extra important to check on its balance sheet strength.

Are Max Ventures and Industries Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

We haven't seen any insiders selling Max Ventures and Industries shares, in the last year. With that in mind, it's heartening that Sahil Vachani, the CEO, MD & Director of the company, paid ₹440k for shares at around ₹43.97 each.

The good news, alongside the insider buying, for Max Ventures and Industries bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold ₹957m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 5.2% of the company, demonstrating a degree of high-level alignment with shareholders.

Does Max Ventures and Industries Deserve A Spot On Your Watchlist?

For growth investors like me, Max Ventures and Industries's raw rate of earnings growth is a beacon in the night. Better still, insiders own a large chunk of the company and one has even been buying more shares. So I do think this is one stock worth watching. However, before you get too excited we've discovered 2 warning signs for Max Ventures and Industries that you should be aware of.

As a growth investor I do like to see insider buying. But Max Ventures and Industries isn't the only one. You can see a a free list of them here.

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

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.

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