Is It Too Late To Consider Buying Adani Transmission Limited (NSE:ADANITRANS)?

Today we're going to take a look at the well-established Adani Transmission Limited (NSE:ADANITRANS). The company's stock led the NSEI gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock, it seems odd Adani Transmission is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Today I will analyse the most recent data on Adani Transmission’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Adani Transmission

Is Adani Transmission still cheap?

The stock is currently trading at ₹2,296 on the share market, which means it is overvalued by 30% compared to my intrinsic value of ₹1762.32. This means that the opportunity to buy Adani Transmission at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Adani Transmission’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Adani Transmission 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. Adani Transmission's earnings over the next few years are expected to increase by 21%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ADANITRANS’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ADANITRANS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ADANITRANS for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ADANITRANS, which means it’s worth diving deeper into other factors 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. Case in point: We've spotted 1 warning sign for Adani Transmission you should be aware of.

If you are no longer interested in Adani Transmission, 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.