Should You Investigate RattanIndia Enterprises Limited (NSE:RTNINDIA) At ₹76.65?

RattanIndia Enterprises Limited (NSE:RTNINDIA), is not the largest company out there, but it saw a decent share price growth of 17% on the NSEI over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine RattanIndia Enterprises’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for RattanIndia Enterprises

What Is RattanIndia Enterprises Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that RattanIndia Enterprises’s ratio of 28.63x is trading slightly below its industry peers’ ratio of 28.63x, which means if you buy RattanIndia Enterprises today, you’d be paying a decent price for it. And if you believe RattanIndia Enterprises should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that RattanIndia Enterprises’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of RattanIndia Enterprises look like?

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. However, with a relatively muted revenue growth of 2.9% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for RattanIndia Enterprises.

What This Means For You

Are you a shareholder? It seems like the market has already priced in RTNINDIA’s growth outlook, with shares trading around industry price multiples. 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 RTNINDIA? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on RTNINDIA, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 3 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in RattanIndia Enterprises.

If you are no longer interested in RattanIndia Enterprises, 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.