Should You Investigate Adani Enterprises Limited (NSE:ADANIENT) At ₹2,411?

Adani Enterprises Limited (NSE:ADANIENT) saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock, it seems odd Adani Enterprises is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Adani Enterprises’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What Is Adani Enterprises Worth?

Adani Enterprises appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Adani Enterprises’s ratio of 77.74x is above its peer average of 25.64x, which suggests the stock is trading at a higher price compared to the Trade Distributors industry. Furthermore, Adani Enterprises’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

See our latest analysis for Adani Enterprises

What does the future of Adani Enterprises look like?

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. In Adani Enterprises' case, its earnings over the next year are expected to double, indicating an incredibly 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? ADANIENT’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe ADANIENT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 ADANIENT for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for ADANIENT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Adani Enterprises, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Adani Enterprises and we think they deserve your attention.

If you are no longer interested in Adani Enterprises, 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.