Here's Why Shree Pushkar Chemicals & Fertilisers (NSE:SHREEPUSHK) Has Caught The Eye Of Investors

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 Shree Pushkar Chemicals & Fertilisers (NSE:SHREEPUSHK). 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.

See our latest analysis for Shree Pushkar Chemicals & Fertilisers

How Fast Is Shree Pushkar Chemicals & Fertilisers 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. Over the last three years, Shree Pushkar Chemicals & Fertilisers has grown EPS by 13% per year. That's a pretty good rate, if the company can sustain it.

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. While we note Shree Pushkar Chemicals & Fertilisers achieved similar EBIT margins to last year, revenue grew by a solid 55% to ₹6.3b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Shree Pushkar Chemicals & Fertilisers isn't a huge company, given its market capitalisation of ₹8.2b. That makes it extra important to check on its balance sheet strength.

Are Shree Pushkar Chemicals & Fertilisers Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Although we did see some insider selling (worth ₹727k) this was overshadowed by a mountain of buying, totalling ₹188m in just one year. We find this encouraging because it suggests they are optimistic about Shree Pushkar Chemicals & Fertilisers'future. Zooming in, we can see that the biggest insider purchase was by Chairman & MD Punit Makharia for ₹150m worth of shares, at about ₹190 per share.

On top of the insider buying, we can also see that Shree Pushkar Chemicals & Fertilisers insiders own a large chunk of the company. Indeed, with a collective holding of 70%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. To give you an idea, the value of insiders' holdings in the business are valued at ₹5.7b at the current share price. That's nothing to sneeze at!

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. The cherry on top is that the CEO, Punit Makharia is paid comparatively modestly to CEOs at similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Shree Pushkar Chemicals & Fertilisers with market caps under ₹16b is about ₹3.0m.

Shree Pushkar Chemicals & Fertilisers' CEO only received compensation totalling ₹1.7m in the year to March 2021. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Is Shree Pushkar Chemicals & Fertilisers Worth Keeping An Eye On?

One important encouraging feature of Shree Pushkar Chemicals & Fertilisers is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. You still need to take note of risks, for example - Shree Pushkar Chemicals & Fertilisers has 2 warning signs we think you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Shree Pushkar Chemicals & Fertilisers, you'll probably love this free list of growing companies that insiders are 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.