Capacit'e Infraprojects Limited (NSE:CAPACITE): Can Growth Justify Its January Share Price?

Capacit'e Infraprojects Limited (NSE:CAPACITE) is considered a high growth stock. However its last closing price of ₹245.55 left investors wondering whether this growth has already been factored into the share price. Below I will be talking through a basic metric which will help answer this question.

See our latest analysis for Capacit'e Infraprojects

How is Capacit'e Infraprojects going to perform in the future?

If you are bullish about Capacit'e Infraprojects's growth potential then you are certainly not alone. The consensus forecast from 3 analysts is extremely bullish with earnings per share estimated to surge from current levels of ₹13.85 to ₹25.98 over the next three years. On average, this leads to a growth rate of 25% each year, which signals a market-beating outlook in the upcoming years.

Is CAPACITE available at a good price after accounting for its growth?

CAPACITE is trading at price-to-earnings (PE) ratio of 17.78x, which suggests that Capacit'e Infraprojects is overvalued based on current earnings compared to the Real Estate industry average of 17.13x , and overvalued compared to the IN market average ratio of 17.11x .

We already know that CAPACITE appears to be overvalued when compared to its industry average. But, since Capacit'e Infraprojects is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 17.78x and expected year-on-year earnings growth of 25% give Capacit'e Infraprojects a very low PEG ratio of 0.70x. This tells us that when we include its growth in our analysis Capacit'e Infraprojects's stock can be considered relatively cheap , based on its fundamentals.

What this means for you:

CAPACITE's current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you're a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:

1. Financial Health: Are CAPACITE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Past Track Record: Has CAPACITE been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of CAPACITE's historicals for more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.