With EPS Growth And More, Shivalik Bimetal Controls (NSE:SBCL) Makes An Interesting Case

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Shivalik Bimetal Controls (NSE:SBCL). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Shivalik Bimetal Controls

Shivalik Bimetal Controls' Improving Profits

Shivalik Bimetal Controls has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. It's good to see that Shivalik Bimetal Controls' EPS has grown from ₹12.51 to ₹13.90 over twelve months. There's little doubt shareholders would be happy with that 11% gain.

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. While we note Shivalik Bimetal Controls achieved similar EBIT margins to last year, revenue grew by a solid 17% to ₹5.1b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

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 Shivalik Bimetal Controls' balance sheet strength, before getting too excited.

Are Shivalik Bimetal Controls Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Shivalik Bimetal Controls shares worth a considerable sum. Holding ₹6.4b worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. At 19% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Should You Add Shivalik Bimetal Controls To Your Watchlist?

One important encouraging feature of Shivalik Bimetal Controls is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. The combination definitely favoured by investors so consider keeping the company on a watchlist. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want to check if Shivalik Bimetal Controls is trading on a high P/E or a low P/E, relative to its industry.

Although Shivalik Bimetal Controls certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Indian companies that not only boast of strong growth but have also seen recent insider buying..

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.