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Nitin Spinners Limited (NSE:NITINSPIN), which is in the luxury 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 ₹95.15 at one point, and dropping to the lows of ₹77.7. 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 Nitin Spinners’s current trading price of ₹77.85 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 Nitin Spinners’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 Nitin Spinners
What’s the opportunity in Nitin Spinners?
Great news for investors – Nitin Spinners is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Nitin Spinners’s ratio of 7.13x is below its peer average of 13.65x, which suggests the stock is undervalued compared to the Luxury industry. Although, there may be another chance to buy again in the future. This is because Nitin Spinners’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 does the future of Nitin Spinners look like?
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. Nitin Spinners’s earnings growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since NITINSPIN is currently undervalued, it may be a great time to accumulate more of 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 capital structure to consider, which could explain the current undervaluation.