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Meghmani Organics Limited (NSE:MEGH), which is in the chemicals business, and is based in India, saw significant share price movement during recent months on the NSEI, rising to highs of ₹70.55 and falling to the lows of ₹59.75. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Meghmani Organics's current trading price of ₹61.2 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 Meghmani Organics’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 Meghmani Organics
What's the opportunity in Meghmani Organics?
Good news, investors! Meghmani Organics is still a bargain right now. 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 6.19x is currently well-below the industry average of 12.71x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Meghmani Organics’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Meghmani Organics?
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. In the upcoming year, Meghmani Organics’s earnings are expected to increase by 43%, 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? Since MEGH is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.