Should You Investigate Intellect Design Arena Limited (NSE:INTELLECT) At ₹636?

Intellect Design Arena Limited (NSE:INTELLECT), is not the largest company out there, but it saw a decent share price growth in the teens level on the NSEI over the last few months. As a small cap stock, which tends to lack high analyst coverage, 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? Today I will analyse the most recent data on Intellect Design Arena’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Intellect Design Arena

What Is Intellect Design Arena Worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 29.74x is currently trading in-line with its industry peers’ ratio, which means if you buy Intellect Design Arena today, you’d be paying a relatively sensible price for it. Is there another opportunity to buy low in the future? Since Intellect Design Arena’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Intellect Design Arena generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 90% over the next couple of years, the future seems bright for Intellect Design Arena. 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? INTELLECT’s optimistic future growth appears to have been factored into the current share price, 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 INTELLECT? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on INTELLECT, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for INTELLECT, 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.

If you'd like to know more about Intellect Design Arena as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Intellect Design Arena you should know about.

If you are no longer interested in Intellect Design Arena, 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.