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Bajaj Electricals Limited (NSE:BAJAJELEC), which is in the consumer durables business, and is based in India, received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹631.9 at one point, and dropping to the lows of ₹477.55. 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 Bajaj Electricals’s current trading price of ₹498.65 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 Bajaj Electricals’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 Bajaj Electricals
Is Bajaj Electricals still cheap?
According to my valuation model, Bajaj Electricals seems to be fairly priced at around 12.93% above my intrinsic value, which means if you buy Bajaj Electricals today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₹441.56, there’s only an insignificant downside when the price falls to its real value. Furthermore, Bajaj Electricals’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Bajaj Electricals?
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. 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. Bajaj 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? It seems like the market has already priced in BAJAJELEC’s positive 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on BAJAJELEC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.