In This Article:
Orient Cement Limited (NSE:ORIENTCEM), which is in the basic materials business, and is based in India, saw significant share price volatility over the past couple of months on the NSEI, rising to the highs of ₹128 and falling to the lows of ₹84.1. 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 Orient Cement’s current trading price of ₹88.2 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 Orient Cement’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 Orient Cement
What is Orient Cement worth?
Good news, investors! Orient Cement is still a bargain right now. My valuation model shows that the intrinsic value for the stock is ₹129.26, but it is currently trading at ₹88.20 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Orient Cement’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.
What kind of growth will Orient Cement generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double over the next couple of years, the future seems bright for Orient Cement. 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? Since ORIENTCEM is currently undervalued, it may be a great time to accumulate more of 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.
Are you a potential investor? If you’ve been keeping an eye on ORIENTCEM for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ORIENTCEM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.