What Is Techno Electric & Engineering Company Limited's (NSE:TECHNOE) Share Price Doing?

While Techno Electric & Engineering Company Limited (NSE:TECHNOE) might not have the largest market cap around , it led the NSEI gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a ₹177b market-cap stock, it seems odd Techno Electric & Engineering is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Techno Electric & Engineering’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In Techno Electric & Engineering?

Techno Electric & Engineering appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 40.61x is currently well-above the industry average of 20.45x, meaning that it is trading at a more expensive price relative to its peers. In addition to this, it seems like Techno Electric & Engineering’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Check out our latest analysis for Techno Electric & Engineering

Can we expect growth from Techno Electric & Engineering?

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. Techno Electric & Engineering's earnings growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? TECHNOE’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe TECHNOE 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 TECHNOE 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 optimistic prospect is encouraging for TECHNOE, 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 Techno Electric & Engineering, you'd also look into what risks it is currently facing. For example - Techno Electric & Engineering has 1 warning sign we think you should be aware of.

If you are no longer interested in Techno Electric & Engineering, 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.