SmallCap Hunter : Trying to find the dark horses with triggers

Few things to note for this company:

1. Margin is low. But the margin has been increasing. This means they are adding higher margin products. This is exactly what management spoke about. Walking the talk.

   

2. “check the short term borrowings which is growing tremendously”—Their short term borrowing is at March 2016 levels. Whereas their sales is more than 4x the March 2016 sales.

   

My take: I know that not every financial ratio is perfect here. I believe if that had been the case, the company would not be trading at sub 10 PE. We can invest during their journey of improving financials(most of the PE expansion happens here). Or after the financials have improved(returns based on earnings only). I choose to do the former.