Is It Time To Consider Buying Minda Corporation Limited (NSE:MINDACORP)?

Simply Wall St · 10/17 00:09

While Minda Corporation Limited (NSE:MINDACORP) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Minda’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Minda

Is Minda 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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Minda’s ratio of 52.66x is above its peer average of 33.05x, which suggests the stock is trading at a higher price compared to the Auto Components industry. In addition to this, it seems like Minda’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Minda look like?

earnings-and-revenue-growth
NSEI:MINDACORP Earnings and Revenue Growth October 17th 2024

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. Minda's earnings over the next few years are expected to increase by 78%, 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 MINDACORP’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 MINDACORP 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 MINDACORP 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 optimistic prospect is encouraging for MINDACORP, 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 Minda, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Minda.

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