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Infibeam Avenues Limited (NSE:INFIBEAM), which is in the online retail business, and is based in India, received a lot of attention from a substantial price increase on the NSEI over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Infibeam Avenues’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Infibeam Avenues
What is Infibeam Avenues worth?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 38.73x is currently trading slightly above its industry peers’ ratio of 36.73x, which means if you buy Infibeam Avenues today, you’d be paying a relatively fair price for it. And if you believe Infibeam Avenues should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Infibeam Avenues’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Infibeam Avenues generate?
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. 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 more than double over the next couple of years, the future seems bright for Infibeam Avenues. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in INFIBEAM’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 INFIBEAM? Will you have enough confidence to invest in the company should the price drop below its fair value?