Why Avanti Feeds Limited (NSE:AVANTIFEED) Could Be Worth Watching

While Avanti Feeds Limited (NSE:AVANTIFEED) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NSEI over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Avanti Feeds’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Avanti Feeds

What is Avanti Feeds worth?

Avanti Feeds appears to be overvalued by 34% at the moment, based on my discounted cash flow valuation. The stock is currently priced at ₹503 on the market compared to my intrinsic value of ₹374.82. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Avanti Feeds’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Avanti Feeds look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted profit growth of 7.0% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Avanti Feeds, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in AVANTIFEED’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe AVANTIFEED 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 tabs on AVANTIFEED for some time, 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 means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Avanti Feeds as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Avanti Feeds you should be aware of.

If you are no longer interested in Avanti Feeds, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade Avanti Feeds, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.