Why Hindalco Industries Limited (NSE:HINDALCO) Could Be A Buy
Hindalco Industries Limited (NSEI:HINDALCO), a metals and mining company based in India, saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Hindalco Industries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Hindalco Industries
What’s the opportunity in Hindalco Industries?
Hindalco Industries appears to be overvalued by 22% at the moment, based on my discounted cash flow valuation. The stock is currently priced at ₹276.5 on the market compared to my intrinsic value of ₹227.03. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Hindalco Industries’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from Hindalco Industries?
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. Hindalco Industries’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? Hindalco Industries’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe Hindalco Industries should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on Hindalco Industries for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for Hindalco Industries, which means it’s worth diving deeper into other factors 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 Hindalco Industries. You can find everything you need to know about Hindalco Industries in the latest infographic research report. If you are no longer interested in Hindalco Industries, 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.
