Why GAIL (India) Limited (NSE:GAIL) Could Be Worth Watching

Today we're going to take a look at the well-established GAIL (India) Limited (NSE:GAIL). The company's stock led the NSEI gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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 take a look at GAIL (India)’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for GAIL (India)

Is GAIL (India) Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 11.67% above our intrinsic value, which means if you buy GAIL (India) today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is ₹155.64, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, GAIL (India)’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from GAIL (India)?

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. GAIL (India)'s earnings over the next few years are expected to increase by 64%, 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 already priced in GAIL’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on GAIL, now may not be the most advantageous 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that GAIL (India) has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in GAIL (India), 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.