Is There Now An Opportunity In Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT)?

Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT), might not be a large cap stock, but it received a lot of attention from a substantial price increase 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 ₹207b market-cap stock, it seems odd Chambal Fertilisers and Chemicals 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? Today we will analyse the most recent data on Chambal Fertilisers and Chemicals’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Chambal Fertilisers and Chemicals

What Is Chambal Fertilisers and Chemicals Worth?

Good news, investors! Chambal Fertilisers and Chemicals is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Chambal Fertilisers and Chemicals’s ratio of 16.23x is below its peer average of 35.19x, which indicates the stock is trading at a lower price compared to the Chemicals industry. Chambal Fertilisers and Chemicals’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Chambal Fertilisers and Chemicals?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Chambal Fertilisers and Chemicals' earnings over the next few years are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since CHAMBLFERT is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive 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 CHAMBLFERT for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CHAMBLFERT. 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.

So while earnings quality is important, it's equally important to consider the risks facing Chambal Fertilisers and Chemicals at this point in time. Case in point: We've spotted 3 warning signs for Chambal Fertilisers and Chemicals you should be aware of.

If you are no longer interested in Chambal Fertilisers and Chemicals, 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.

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