Stock Analysis

Is CESC Limited (NSE:CESC) Potentially Undervalued?

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NSEI:CESC
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CESC Limited (NSE:CESC), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine CESC’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for CESC

Is CESC Still Cheap?

Good news, investors! CESC is still a bargain right now according to my price multiple model, which compares 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 7.86x is currently well-below the industry average of 28.78x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because CESC’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will CESC generate?

earnings-and-revenue-growth
NSEI:CESC Earnings and Revenue Growth August 31st 2022

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 26% over the next couple of years, the future seems bright for CESC. 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? Since CESC is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on CESC for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CESC. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 1 warning sign for CESC and you'll want to know about it.

If you are no longer interested in CESC, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether CESC is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NSEI:CESC

CESC

CESC Limited, an integrated electrical utility company, engages in the generation and distribution of electricity in India.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation6
Future Growth1
Past Performance2
Financial Health1
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Very undervalued established dividend payer.