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Onward Technologies Limited (NSEI:ONWARDTEC), a it company based in India, received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹111.5 at one point, and dropping to the lows of ₹81.75. 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 Onward Technologies’s current trading price of ₹81.75 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 Onward Technologies’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 Onward Technologies
Is Onward Technologies still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. 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 16.89x is currently trading slightly below its industry peers’ ratio of 18.3x, which means if you buy Onward Technologies today, you’d be paying a fair price for it. And if you believe Onward Technologies should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Onward Technologies’s share price is quite stable, which means 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 kind of growth will Onward Technologies generate?
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 65.53% over the next year, the near-term future seems bright for Onward Technologies. 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? ONWARDTEC’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 track record of its management team. Have these factors changed since the last time you looked at ONWARDTEC? Will you have enough confidence to invest in the company should the price drop below its fair value?