Ashok Leyland Limited (NSEI:ASHOKLEY), a machinery company based in India, received a lot of attention from a substantial price increase on the NSEI over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Ashok Leyland’s outlook and valuation to see if the opportunity still exists. See our latest analysis for Ashok Leyland

Is Ashok Leyland still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% above my intrinsic value, which means if you buy Ashok Leyland today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth ₹120.93, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Ashok Leyland’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Ashok Leyland generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Ashok Leyland’s earnings over the next few years are expected to increase by 38.72%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? ASHOKLEY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ASHOKLEY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.