Many Still Looking Away From ITD Cementation India Limited (NSE:ITDCEM)

There wouldn't be many who think ITD Cementation India Limited's (NSE:ITDCEM) price-to-earnings (or "P/E") ratio of 24.7x is worth a mention when the median P/E in India is similar at about 27x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

We've discovered 1 warning sign about ITD Cementation India. View them for free.

Recent times have been advantageous for ITD Cementation India as its earnings have been rising faster than most other companies. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

See our latest analysis for ITD Cementation India

Keen to find out how analysts think ITD Cementation India's future stacks up against the industry? In that case, our free report is a great place to start.

How Is ITD Cementation India's Growth Trending?

There's an inherent assumption that a company should be matching the market for P/E ratios like ITD Cementation India's to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 57%. Pleasingly, EPS has also lifted 233% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing earnings over that time.

Turning to the outlook, the next year should generate growth of 29% as estimated by the three analysts watching the company. That's shaping up to be materially higher than the 25% growth forecast for the broader market.

With this information, we find it interesting that ITD Cementation India is trading at a fairly similar P/E to the market. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Final Word

It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our examination of ITD Cementation India's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E as much as we would have predicted. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing pressure on the P/E ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future earnings could see some volatility.

Having said that, be aware ITD Cementation India is showing 1 warning sign in our investment analysis, you should know about.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.

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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.