When Should You Buy RHI Magnesita India Limited (NSE:RHIM)?

While RHI Magnesita India Limited (NSE:RHIM) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. Less-covered, small caps sees 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 RHI Magnesita India’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for RHI Magnesita India

What's The Opportunity In RHI Magnesita India?

RHI Magnesita India appears to be overvalued by 29% at the moment, based on our discounted cash flow valuation. The stock is currently priced at ₹554 on the market compared to our intrinsic value of ₹429.25. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like RHI Magnesita India’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from RHI Magnesita India?

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. RHI Magnesita India's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? RHIM’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RHIM should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 RHIM for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for RHIM, 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 RHI Magnesita India as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for RHI Magnesita India you should know about.

If you are no longer interested in RHI Magnesita India, 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.