Dabur India Limited (NSEI:DABUR), a personal products company based in India, saw a decent share price growth in the teens level on the NSEI over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Dabur India’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Dabur India
What is Dabur India 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 49.73x is currently trading slightly above its industry peers’ ratio of 48.7x, which means if you buy Dabur India today, you’d be paying a relatively reasonable price for it. And if you believe Dabur India should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Dabur India’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Dabur India 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. Dabur India’s earnings over the next few years are expected to increase by 37.67%, 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? Dabur India’s optimistic future growth appears to have been factored into the current share price, 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 Dabur India? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on Dabur India, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for Dabur India, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.