Power Finance Corporation Limited (NSEI:PFC), a diversified financial 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 ₹145.4 at one point, and dropping to the lows of ₹115.25. 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 Power Finance’s current trading price of ₹120.95 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 Power Finance’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 Power Finance
What’s the opportunity in Power Finance?
Great news for investors – Power Finance is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is ₹250.05, but it is currently trading at ₹120.95 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Power Finance’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.
What does the future of Power Finance look like?
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 Power Finance. It looks like higher cash flows 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 Power Finance 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 Power Finance 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 Power Finance. 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.