Is The Anup Engineering Limited (NSE:ANUP) Potentially Undervalued?

While The Anup Engineering Limited (NSE:ANUP) 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. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Anup Engineering’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Anup Engineering

What's the opportunity in Anup Engineering?

Anup Engineering appears to be overvalued by 21% at the moment, based on my discounted cash flow valuation. The stock is currently priced at ₹649 on the market compared to my intrinsic value of ₹538.10. 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. Since Anup Engineering’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Anup Engineering generate?

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 revenues expected to grow by 77% over the next couple of years, the future seems bright for Anup Engineering. If the level of expenses is able to be maintained, 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? It seems like the market has well and truly priced in ANUP’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ANUP 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 an eye on ANUP for a while, 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 is encouraging for ANUP, which 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 Anup Engineering as a business, it's important to be aware of any risks it's facing. When we did our research, we found 4 warning signs for Anup Engineering (1 can't be ignored!) that we believe deserve your full attention.

If you are no longer interested in Anup Engineering, 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. 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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