Is Now The Time To Look At Buying Amara Raja Energy & Mobility Limited (NSE:ARE&M)?

Amara Raja Energy & Mobility Limited (NSE:ARE&M), might not be a large cap stock, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹1,331 and falling to the lows of ₹948. 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 ₹1,007 reflective of the actual value of the mid-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.

See our latest analysis for Amara Raja Energy & Mobility

What's The Opportunity In Amara Raja Energy & Mobility?

Good news, investors! Amara Raja Energy & Mobility is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.2x is currently well-below the industry average of 36.51x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Amara Raja Energy & Mobility’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Amara Raja Energy & Mobility?

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 grow by 26% 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 ARE&M 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on ARE&M 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 ARE&M. But before you make any investment decisions, consider other factors such as the track record of its management team, 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. You'd be interested to know, that we found 1 warning sign for Amara Raja Energy & Mobility and you'll want to know about it.

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.