Swaraj Engines Limited (NSEI:SWARAJENG), a machinery 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 ₹2192.25 at one point, and dropping to the lows of ₹1902.25. 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 Swaraj Engines’s current trading price of ₹1988.5 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 Swaraj Engines’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Swaraj Engines

What is Swaraj Engines worth?

According to my valuation model, the stock is currently overvalued by about 100%, trading at ₹1,988.50 compared to my intrinsic value of ₹994.82. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Swaraj Engines’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Swaraj Engines?

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 29.74% over the next couple of years, the future seems bright for Swaraj Engines. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? SWARAJENG’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SWARAJENG 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.

Are you a potential investor? If you’ve been keeping tabs on SWARAJENG for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for SWARAJENG, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.