If EPS Growth Is Important To You, InterGlobe Aviation (NSE:INDIGO) Presents An Opportunity

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. 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.

In contrast to all that, many investors prefer to focus on companies like InterGlobe Aviation (NSE:INDIGO), 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 InterGlobe Aviation with the means to add long-term value to shareholders.

Check out our latest analysis for InterGlobe Aviation

InterGlobe Aviation's Improving Profits

In the last three years InterGlobe Aviation'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. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, InterGlobe Aviation's EPS grew from ₹99.84 to ₹202, over the previous 12 months. It's not often a company can achieve year-on-year growth of 103%.

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. InterGlobe Aviation shareholders can take confidence from the fact that EBIT margins are up from 12% 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. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for InterGlobe Aviation's future profits.

Are InterGlobe Aviation Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a ₹1.7t company like InterGlobe Aviation. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. We note that their impressive stake in the company is worth ₹100b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Does InterGlobe Aviation Deserve A Spot On Your Watchlist?

InterGlobe Aviation's 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 InterGlobe Aviation for a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 1 warning sign for InterGlobe Aviation that you need to be mindful of.

Although InterGlobe Aviation certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

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.