Why IRB Infrastructure Developers Limited (NSE:IRB) Could Be Worth Watching

IRB Infrastructure Developers Limited (NSE:IRB), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NSEI over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at IRB Infrastructure Developers’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for IRB Infrastructure Developers

Is IRB Infrastructure Developers still cheap?

IRB Infrastructure Developers is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison 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 IRB Infrastructure Developers’s ratio of 34.85x is above its peer average of 17.83x, which suggests the stock is trading at a higher price compared to the Construction industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since IRB Infrastructure Developers’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 does the future of IRB Infrastructure Developers 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. With profit expected to more than double over the next couple of years, the future seems bright for IRB Infrastructure Developers. 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 IRB’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe IRB 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 IRB 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 IRB, 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 IRB Infrastructure Developers, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 4 warning signs for IRB Infrastructure Developers (of which 2 are a bit unpleasant!) you should know about.

If you are no longer interested in IRB Infrastructure Developers, 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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