Kesar Terminals & Infrastructure Limited (NSEI:KTIL), an energy 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 ₹209.1 at one point, and dropping to the lows of ₹179.8. 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 Kesar Terminals & Infrastructure’s current trading price of ₹182.65 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 Kesar Terminals & Infrastructure’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Kesar Terminals & Infrastructure
What’s the opportunity in Kesar Terminals & Infrastructure?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 3.07x is currently trading slightly above its industry peers’ ratio of 2.26x, which means if you buy Kesar Terminals & Infrastructure today, you’d be paying a relatively reasonable price for it. And if you believe Kesar Terminals & Infrastructure should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Kesar Terminals & Infrastructure’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 Kesar Terminals & Infrastructure?
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. However, with a relatively muted revenue growth of 7.44% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Kesar Terminals & Infrastructure, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in Kesar Terminals & Infrastructure’s growth outlook, 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 Kesar Terminals & Infrastructure? Will you have enough confidence to invest in the company should the price drop below its fair value?