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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In contrast to all that, I prefer to spend time on companies like India Motor Parts and Accessories (NSE:IMPAL), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for India Motor Parts and Accessories
How Fast Is India Motor Parts and Accessories 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). It's no surprise, then, that I like to invest in companies with EPS growth. Over the last three years, India Motor Parts and Accessories has grown EPS by 16% per year. That's a pretty good rate, if the company can sustain it.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. India Motor Parts and Accessories maintained stable EBIT margins over the last year, all while growing revenue 9.4% to ₹5.2b. That's a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
India Motor Parts and Accessories isn't a huge company, given its market capitalization of ₹7.3b. That makes it extra important to check on its balance sheet strength.
Are India Motor Parts and Accessories Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that India Motor Parts and Accessories insiders have a significant amount of capital invested in the stock. To be specific, they have ₹984m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 14% of the company; visible skin in the game.