Bharat Heavy Electricals Limited (NSEI:BHEL), a electrical equipment company based in India, received a lot of attention from a substantial price movement on the NSEI in the over the last few months, increasing to ₹100 at one point, and dropping to the lows of ₹82.65. 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 Bharat Heavy Electricals’s current trading price of ₹89.25 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bharat Heavy Electricals’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 Bharat Heavy Electricals
Is Bharat Heavy Electricals still cheap?
The stock is currently trading at ₹89.25 on the share market, which means it is overvalued by 49% compared to my intrinsic value of ₹59.86. This means that the opportunity to buy Bharat Heavy Electricals at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Bharat Heavy Electricals’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from Bharat Heavy Electricals?
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. Bharat Heavy Electricals’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Bharat Heavy Electricals’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Bharat Heavy Electricals should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on Bharat Heavy Electricals for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for Bharat Heavy Electricals, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.