Is Now An Opportune Moment To Examine Amara Raja Energy & Mobility Limited (NSE:AMARAJABAT)?

Amara Raja Energy & Mobility Limited (NSE:AMARAJABAT), is not the largest company out there, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹685 and falling to the lows of ₹612. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Amara Raja Energy & Mobility's current trading price of ₹617 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Amara Raja Energy & Mobility’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Amara Raja Energy & Mobility

What Is Amara Raja Energy & Mobility Worth?

Good news, investors! Amara Raja Energy & Mobility is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Amara Raja Energy & Mobility’s ratio of 13.97x is below its peer average of 35.52x, which indicates the stock is trading at a lower price compared to the Electrical industry. What’s more interesting is that, Amara Raja Energy & Mobility’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Amara Raja Energy & Mobility?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 24% over the next couple of years, the future seems bright for Amara Raja Energy & Mobility. 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? Since AMARAJABAT is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on AMARAJABAT for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AMARAJABAT. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Amara Raja Energy & Mobility.

If you are no longer interested in Amara Raja Energy & Mobility, 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.