MOIL Limited (NSEI:MOIL), a metals and mining company based in India, received a lot of attention from a substantial price movement on the NSEI in the over the last few months, increasing to ₹257 at one point, and dropping to the lows of ₹210. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether MOIL’s current trading price of ₹224.25 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 MOIL’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 MOIL

What is MOIL worth?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 21.98x is currently trading slightly above its industry peers’ ratio of 21.29x, which means if you buy MOIL today, you’d be paying a relatively fair price for it. And if you believe MOIL should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, MOIL’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will MOIL 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. MOIL’s earnings over the next few years are expected to increase by 96.91%, 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? It seems like the market has already priced in MOIL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at MOIL? Will you have enough confidence to invest in the company should the price drop below its fair value?