We Ran A Stock Scan For Earnings Growth And Kilitch Drugs (India) (NSE:KILITCH) Passed With Ease

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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Kilitch Drugs (India) (NSE:KILITCH), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kilitch Drugs (India) with the means to add long-term value to shareholders.

Check out our latest analysis for Kilitch Drugs (India)

How Fast Is Kilitch Drugs (India) Growing Its Earnings Per Share?

In the last three years Kilitch Drugs (India)'s earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Kilitch Drugs (India)'s EPS skyrocketed from ₹5.48 to ₹8.73, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 59%.

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. Kilitch Drugs (India) shareholders can take confidence from the fact that EBIT margins are up from 8.7% to 15%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

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.

Kilitch Drugs (India) isn't a huge company, given its market capitalisation of ₹7.0b. That makes it extra important to check on its balance sheet strength.

Are Kilitch Drugs (India) Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Kilitch Drugs (India) followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. As a matter of fact, their holding is valued at ₹2.2b. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 31% of the company; visible skin in the game.

Is Kilitch Drugs (India) Worth Keeping An Eye On?

For growth investors, Kilitch Drugs (India)'s raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Kilitch Drugs (India)'s continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. However, before you get too excited we've discovered 3 warning signs for Kilitch Drugs (India) (1 doesn't sit too well with us!) that you should be aware of.

Although Kilitch Drugs (India) 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.