Should You Investigate Dhampur Sugar Mills Limited (NSE:DHAMPURSUG) At ₹261?

Dhampur Sugar Mills Limited (NSE:DHAMPURSUG), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹318 at one point, and dropping to the lows of ₹254. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Dhampur Sugar Mills' current trading price of ₹261 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Dhampur Sugar Mills’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Dhampur Sugar Mills

Is Dhampur Sugar Mills Still Cheap?

Great news for investors – Dhampur Sugar Mills is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’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 10.57x is currently well-below the industry average of 26.47x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Dhampur Sugar Mills’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Dhampur Sugar Mills?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. In Dhampur Sugar Mills' case, its revenues are expected to grow by 30% over the next year, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since DHAMPURSUG is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on DHAMPURSUG for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DHAMPURSUG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

If you'd like to know more about Dhampur Sugar Mills as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Dhampur Sugar Mills you should be mindful of and 1 of these is potentially serious.

If you are no longer interested in Dhampur Sugar Mills, 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.