Indiabulls Real Estate Limited (NSEI:IBREALEST), a real estate company based in India, saw a decent share price growth in the teens level on the NSEI over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Indiabulls Real Estate’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Indiabulls Real Estate
What’s the opportunity in Indiabulls Real Estate?
The stock seems fairly valued at the moment according to my relative valuation model. 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 Indiabulls Real Estate’s ratio of 24.39x is trading slightly below its industry peers’ ratio of 26.57x, which means if you buy Indiabulls Real Estate today, you’d be paying a reasonable price for it. And if you believe that Indiabulls Real Estate should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Indiabulls Real Estate’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.
Can we expect growth from Indiabulls Real Estate?
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. Indiabulls Real Estate’s earnings over the next few years are expected to increase by 21.04%, 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? Indiabulls Real Estate’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 Indiabulls Real Estate? Will you have enough confidence to invest in the company should the price drop below its fair value?