Is It Too Late To Consider Buying S H Kelkar and Company Limited (NSE:SHK)?

While S H Kelkar and Company Limited (NSE:SHK) 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 ₹139 and falling to the lows of ₹109. 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 S H Kelkar's current trading price of ₹118 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 S H Kelkar’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 S H Kelkar

What's the opportunity in S H Kelkar?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.11% above my intrinsic value, which means if you buy S H Kelkar today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₹101.46, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, S H Kelkar’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of S H Kelkar look like?

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. S H Kelkar's earnings over the next few years are expected to increase by 41%, 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? SHK’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 SHK, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 2 warning signs for S H Kelkar and you'll want to know about these.

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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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