Is It Too Late To Consider Buying Rail Vikas Nigam Limited (NSE:RVNL)?

Rail Vikas Nigam Limited (NSE:RVNL), might not be a large cap stock, but it saw a decent share price growth of 20% on the NSEI over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a ₹551b market cap stock, it seems odd Rail Vikas Nigam is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Rail Vikas Nigam’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Rail Vikas Nigam

Is Rail Vikas Nigam Still Cheap?

The stock is currently trading at ₹264 on the share market, which means it is overvalued by 22% compared to our intrinsic value of ₹216.36. 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. Given that Rail Vikas Nigam’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Rail Vikas Nigam 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. 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 profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Rail Vikas Nigam. 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 RVNL’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RVNL 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 tabs on RVNL for some time, 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 RVNL, 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 Rail Vikas Nigam, you'd also look into what risks it is currently facing. For example - Rail Vikas Nigam has 1 warning sign we think you should be aware of.

If you are no longer interested in Rail Vikas Nigam, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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

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.