Is There Now An Opportunity In Sterlite Technologies Limited (NSE:STLTECH)?

Sterlite Technologies Limited (NSE:STLTECH), is not the largest company out there, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹185 and falling to the lows of ₹159. 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 Sterlite Technologies' current trading price of ₹167 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 Sterlite Technologies’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 Sterlite Technologies

What Is Sterlite Technologies Worth?

According to my valuation model, Sterlite Technologies seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Sterlite Technologies today, you’d be paying a fair price for it. And if you believe the company’s true value is ₹205.53, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Sterlite Technologies’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 does the future of Sterlite Technologies 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. 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 revenues expected to grow by 43% over the next couple of years, the future seems bright for Sterlite Technologies. If the level of expenses is able to be maintained, 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 already priced in STLTECH’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on STLTECH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into 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 Sterlite Technologies as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Sterlite Technologies and we think they deserve your attention.

If you are no longer interested in Sterlite Technologies, 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.