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Century Plyboards (India) Limited (NSE:CENTURYPLY), which is in the forestry business, and is based in India, received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹188.3 at one point, and dropping to the lows of ₹162.15. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Century Plyboards (India)’s current trading price of ₹170.65 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Century Plyboards (India)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Century Plyboards (India)
What is Century Plyboards (India) worth?
According to my relative valuation model, the stock is currently overvalued. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 23.28x is currently well-above the industry average of 11.49x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Century Plyboards (India)’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Century Plyboards (India)?
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. With profit expected to grow by 34% over the next couple of years, the future seems bright for Century Plyboards (India). 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? CENTURYPLY’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CENTURYPLY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.