Is Now The Time To Look At Buying IFB Industries Limited (NSE:IFBIND)?

IFB Industries Limited (NSE:IFBIND), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. While good news for shareholders, the company has traded much higher in the past year. 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 IFB Industries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for IFB Industries

What's The Opportunity In IFB Industries?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 70.9x is currently well-above the industry average of 53.97x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that IFB Industries’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.

Can we expect growth from IFB Industries?

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 IFB Industries. 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 IFBIND’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 IFBIND 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 IFBIND 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 IFBIND, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about IFB Industries as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for IFB Industries you should know about.

If you are no longer interested in IFB Industries, 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.