Does Sudarshan Chemical Industries (NSE:SUDARSCHEM) Deserve A Spot On Your Watchlist?

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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

Check out our latest analysis for Sudarshan Chemical Industries

Sudarshan Chemical Industries' Earnings Per Share Are Growing

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. To the delight of shareholders, Sudarshan Chemical Industries has achieved impressive annual EPS growth of 42%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Sudarshan Chemical Industries maintained stable EBIT margins over the last year, all while growing revenue 10% to ₹25b. That's progress.

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.

Fortunately, we've got access to analyst forecasts of Sudarshan Chemical Industries' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Sudarshan Chemical Industries Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in Sudarshan Chemical Industries will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 47% of the shares, making insiders a very influential shareholder group. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. This insider holding amounts to That means they have plenty of their own capital riding on the performance of the business!

Is Sudarshan Chemical Industries Worth Keeping An Eye On?

Sudarshan Chemical Industries' earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Sudarshan Chemical Industries for a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for Sudarshan Chemical Industries (1 shouldn't be ignored!) that you need to be mindful of.

Although Sudarshan Chemical Industries 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.