Is There Now An Opportunity In VA Tech Wabag Limited (NSE:WABAG)?

VA Tech Wabag Limited (NSE:WABAG), is not the largest company out there, but it saw significant share price movement during recent months on the NSEI, rising to highs of ₹1,640 and falling to the lows of ₹1,410. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether VA Tech Wabag's current trading price of ₹1,452 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at VA Tech Wabag’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What Is VA Tech Wabag Worth?

According to our valuation model, VA Tech Wabag seems to be fairly priced at around 2.1% below our intrinsic value, which means if you buy VA Tech Wabag today, you’d be paying a fair price for it. And if you believe the company’s true value is ₹1482.95, then there’s not much of an upside to gain from mispricing. Furthermore, VA Tech Wabag’s low beta implies that the stock is less volatile than the wider market.

View our latest analysis for VA Tech Wabag

What kind of growth will VA Tech Wabag generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. VA Tech Wabag's earnings over the next few years are expected to increase by 56%, 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 WABAG’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 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 tabs on WABAG, 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 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. In terms of investment risks, we've identified 1 warning sign with VA Tech Wabag, and understanding it should be part of your investment process.

If you are no longer interested in VA Tech Wabag, 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.