Is HIL Limited (NSE:HIL) Potentially Undervalued?

While HIL Limited (NSE:HIL) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NSEI, rising to highs of ₹2,912 and falling to the lows of ₹2,509. 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 HIL's current trading price of ₹2,524 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 HIL’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for HIL

What Is HIL Worth?

According to my valuation model, HIL seems to be fairly priced at around 15.13% above my intrinsic value, which means if you buy HIL today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth ₹2192.28, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, HIL has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of HIL look like?

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. With profit expected to grow by 56% over the next couple of years, the future seems bright for HIL. 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 already priced in HIL’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 HIL, 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.

If you'd like to know more about HIL as a business, it's important to be aware of any risks it's facing. For example - HIL has 2 warning signs we think you should be aware of.

If you are no longer interested in HIL, 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.