What Does UPL Limited's (NSE:UPL) Share Price Indicate?

UPL Limited (NSE:UPL), is not the largest company out there, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹715 and falling to the lows of ₹590. 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 UPL's current trading price of ₹590 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at UPL’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for UPL

What Is UPL Worth?

According to my valuation model, the stock is currently overvalued by about 25%, trading at ₹590 compared to my intrinsic value of ₹471.15. Not the best news for investors looking to buy! Furthermore, UPL’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 true value, 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.

What kind of growth will UPL generate?

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. 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. With profit expected to grow by 74% over the next couple of years, the future seems bright for UPL. 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 well and truly priced in UPL’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe UPL 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 UPL 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 UPL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into UPL, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for UPL (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

If you are no longer interested in UPL, 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.