At ₹53.02, Is It Time To Put Suzlon Energy Limited (NSE:SUZLON) On Your Watch List?
While Suzlon Energy Limited (NSE:SUZLON) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹60.40 at one point, and dropping to the lows of ₹50.85. 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 Suzlon Energy's current trading price of ₹53.02 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Suzlon Energy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Suzlon Energy?
Great news for investors – Suzlon Energy is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. 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 Suzlon Energy’s ratio of 22.91x is below its peer average of 29.36x, which indicates the stock is trading at a lower price compared to the Electrical industry. What’s more interesting is that, Suzlon Energy’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.
View our latest analysis for Suzlon Energy
What kind of growth will Suzlon Energy 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. However, with a negative profit growth of -2.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Suzlon Energy. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although SUZLON is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to SUZLON, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on SUZLON for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you'd like to know more about Suzlon Energy as a business, it's important to be aware of any risks it's facing. For example - Suzlon Energy has 1 warning sign we think you should be aware of.
If you are no longer interested in Suzlon 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.