KRBL Limited (NSE:KRBL), a food company based in India, received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹546.35 at one point, and dropping to the lows of ₹432.25. 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 KRBL’s current trading price of ₹467.8 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 KRBL’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View out our latest analysis for KRBL
What is KRBL worth?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that KRBL’s ratio of 25.42x is trading slightly above its industry peers’ ratio of 20.77x, which means if you buy KRBL today, you’d be paying a relatively fair price for it. And if you believe KRBL should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like KRBL’s share price is quite stable, which means 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 KRBL?
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. With profit expected to grow by 23.26% over the next couple of years, the future seems bright for KRBL. 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? KRBL’s optimistic future growth appears to have been factored into the current share price, 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 KRBL? 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 an eye on KRBL, 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 KRBL, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on KRBL. You can find everything you need to know about KRBL in the latest infographic research report. If you are no longer interested in KRBL, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.