Is There Now An Opportunity In JK Tyre & Industries Limited (NSE:JKTYRE)?

While JK Tyre & Industries Limited (NSE:JKTYRE) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. As a small cap stock, which tends to lack high analyst coverage, 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? Let’s take a look at JK Tyre & Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for JK Tyre & Industries

Is JK Tyre & Industries still cheap?

Good news, investors! JK Tyre & Industries is still a bargain right now. My valuation model shows that the intrinsic value for the stock is ₹268.55, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that JK Tyre & Industries’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.

Can we expect growth from JK Tyre & Industries?

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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for JK Tyre & Industries, at least in the near future.

What this means for you:

Are you a shareholder? Although JKTYRE is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to JKTYRE, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on JKTYRE for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. When we did our research, we found 3 warning signs for JK Tyre & Industries (2 make us uncomfortable!) that we believe deserve your full attention.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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