Should You Investigate Adani Ports and Special Economic Zone Limited (NSE:ADANIPORTS) At ₹528?

Today we're going to take a look at the well-established Adani Ports and Special Economic Zone Limited (NSE:ADANIPORTS). The company's stock led the NSEI gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Adani Ports and Special Economic Zone’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Adani Ports and Special Economic Zone

What is Adani Ports and Special Economic Zone worth?

According to my valuation model, Adani Ports and Special Economic Zone seems to be fairly priced at around 2.26% above my intrinsic value, which means if you buy Adani Ports and Special Economic Zone today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth ₹516.26, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Adani Ports and Special Economic Zone’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.

Can we expect growth from Adani Ports and Special Economic Zone?

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 profit expected to grow by 69% over the next couple of years, the future seems bright for Adani Ports and Special Economic Zone. 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? ADANIPORTS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on ADANIPORTS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Adani Ports and Special Economic Zone has 3 warning signs we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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