When Should You Buy Samvardhana Motherson International Limited (NSE:MOTHERSON)?

Samvardhana Motherson International Limited (NSE:MOTHERSON), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Samvardhana Motherson International’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Samvardhana Motherson International

What is Samvardhana Motherson International worth?

According to my valuation model, Samvardhana Motherson International seems to be fairly priced at around 13.88% above my intrinsic value, which means if you buy Samvardhana Motherson International today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₹118.06, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Samvardhana Motherson International’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Samvardhana Motherson International 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. With profit expected to more than double over the next couple of years, the future seems bright for Samvardhana Motherson International. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? MOTHERSON’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 financial strength of the company. 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 MOTHERSON, now may not be the most advantageous 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Samvardhana Motherson International has 3 warning signs we think you should be aware of.

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

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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.