Should You Investigate H.G. Infra Engineering Limited (NSE:HGINFRA) At ₹266?

While H.G. Infra Engineering Limited (NSE:HGINFRA) might not be the most widely known stock at the moment, it led the NSEI gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine H.G. Infra Engineering’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for H.G. Infra Engineering

What is H.G. Infra Engineering worth?

According to my valuation model, H.G. Infra Engineering seems to be fairly priced at around 17.41% above my intrinsic value, which means if you buy H.G. Infra Engineering today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₹226.27, there’s only an insignificant downside when the price falls to its real value. Furthermore, H.G. Infra Engineering’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from H.G. Infra Engineering?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. H.G. Infra Engineering's earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? HGINFRA’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 HGINFRA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

If you want to dive deeper into H.G. Infra Engineering, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of H.G. Infra Engineering.

If you are no longer interested in H.G. Infra Engineering, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you decide to trade H.G. Infra Engineering, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.