Bhageria Industries Limited (NSE:BHAGIL), which is in the chemicals business, and is based in India, received a lot of attention from a substantial price increase on the NSEI over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Bhageria Industries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Bhageria Industries
What's the opportunity in Bhageria Industries?
Great news for investors – Bhageria Industries is still trading at a fairly cheap price. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Bhageria Industries’s ratio of 8.14x is below its peer average of 15.19x, which suggests the stock is undervalued compared to the Chemicals industry. Although, there may be another chance to buy again in the future. This is because Bhageria Industries’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Bhageria Industries generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by a double-digit 16% in the upcoming year, the outlook is positive for Bhageria Industries. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since BHAGIL is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BHAGIL for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BHAGIL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.