At ₹1,738, Is It Time To Put KPI Green Energy Limited (NSE:KPIGREEN) On Your Watch List?

While KPI Green Energy Limited (NSE:KPIGREEN) might not have the largest market cap around , it saw a significant share price rise of 86% in the past couple of months on the NSEI. The recent share price gains has brought the company back closer to its yearly peak. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at KPI Green Energy’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for KPI Green Energy

Is KPI Green Energy Still Cheap?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. We’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 69.65x is currently well-above the industry average of 34.34x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since KPI Green Energy’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.

Can we expect growth from KPI Green Energy?

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. In KPI Green Energy's case, its revenues over the next couple of years are expected to double, indicating an incredibly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger 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 KPIGREEN’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe KPIGREEN should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 KPIGREEN for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for KPIGREEN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into KPI Green Energy, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with KPI Green Energy (including 1 which is a bit unpleasant).

If you are no longer interested in KPI Green Energy, 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.