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HEG Limited (NSEI:HEG), a electrical company based in India, received a lot of attention from a substantial price increase on the NSEI over the last few months. As a ₹141.15B market-cap stock, it seems odd HEG is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Today I will analyse the most recent data on HEG’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for HEG
Is HEG still cheap?
Great news for investors – HEG 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 HEG’s ratio of 12.84x is below its peer average of 19.42x, which suggests the stock is undervalued compared to the Electrical industry. However, given that HEG’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of HEG look like?
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 44.65% over the next couple of years, the future seems bright for HEG. 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? Since HEG 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 financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on HEG for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HEG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.