Is E.I.D.- Parry (India) Limited (NSE:EIDPARRY) Potentially Undervalued?

E.I.D.- Parry (India) Limited (NSE:EIDPARRY), is not the largest company out there, but it led the NSEI gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at E.I.D.- Parry (India)’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for E.I.D.- Parry (India)

Is E.I.D.- Parry (India) still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.3% below my intrinsic value, which means if you buy E.I.D.- Parry (India) today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₹331.39, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because E.I.D.- Parry (India)’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from E.I.D.- Parry (India)?

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 the upcoming year, E.I.D.- Parry (India)'s earnings are expected to increase by 37%, 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? It seems like the market has already priced in EIDPARRY’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on EIDPARRY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing E.I.D.- Parry (India) at this point in time. You'd be interested to know, that we found 1 warning sign for E.I.D.- Parry (India) and you'll want to know about this.

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This article by Simply Wall St is general in nature. 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.
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