Undervalued Stocks: Stocks or securities that are undervalued have a market value that is less than their inherent worth. The undervaluation might be attributable to a variety of factors, including sector-specific, socioeconomic, or market-wide decline.
For example, Company A’s stock is now trading at a price of Rs. 1000, but its intrinsic value is assessed to be Rs. 2000. As a result of the fluctuating market conditions, Company A’s shares are valued lower than their potential.
Value investing is the practice of investing in undervalued stocks. Benjamin Graham pioneered it, and his student and protégé Warren Buffet followed suit.
It should be noted that the P/E ratio of a company will also affect its valuation, generally undervalued companies have a lower P/E ratio as compared to overvalued companies.
What Is P/E Ratio?
Undervalued Stocks: The PE ratio of a stock is computed by dividing its share price by its yearly profits per share. A higher PE ratio indicates that investors are paying more per unit of net income, making the company more costly to buy than one with a lower P/E ratio. Value investors frequently look for businesses with low P/E ratios as a way to find cheaper stocks that the market has mostly overlooked.
Top 4 Undervalued Stocks
Top 4 Undervalued Stocks With P/E Ratio < 1:
Forbes & Co
|NSE Code||Not Listed Yet|
Forbes & Company Limited (Forbes & Company) is a business that specializes in industrial equipment. The company’s overall worth (market value) is Rs 494 crore. The current price of one share of the firm on the BSE market is 372.50, and it is not listed on the NSE market. In the year 1919, the corporation was founded.
According to the company’s report, the overall income for the previous year was Rs.202.453 crores, with total sales of Rs.194.88 crores. The net profit of the firm was Rs-24.552 crore. Forbes & Company Limited paid a tax bill of -3.019 crores this year.
- The company’s debt has been lowered.
- Over the previous five years, the company has had a profit increase of 164.36 percent CAGR.
- Over the last five years, the firm has had a terrible revenue growth of -29.70 percent.
- Rs.284.89 crore in contingent liabilities
- The promoters have promised 98.25% of their stake.
- Other revenue of Rs.4248.53 Cr is included in earnings.
Hinduja Global Solutions Limited (Hinduja Global Soln.) is a BPO/KPO business with the NSE code HGS. The company’s overall worth (market value) is Rs 4,011 crore. Today, one share of the firm costs 983.05 on the BSE market and 986.25 in the NSE market. In the year 1995, the firm was founded.
According to the company’s report, overall income for the previous year was Rs 2,506.935 crore, with total sales of Rs 2,381.393 crore. The firm had a net profit of Rs 251.725 crore. In the current fiscal year, Hinduja Global Solutions Limited paid tax of Rs -109.962 crore.
- The company’s debt has been lowered.
- The business is practically debt-free.
- The stock is now selling at a price of 0.53 times its book value.
- With a dividend yield of 11.35 percent, this stock is a smart buy.
- Over the previous five years, the company has had a profit increase of 102.53 percent CAGR.
- The company has a strong return on equity (ROE) history: 78.28% ROE after 3 years
- A robust dividend distribution of 20.77 percent has been maintained by the company.
- Over the last five years, the firm has seen terrible revenue growth of -2.54 percent.
- The tax rate appears to be modest.
- Other revenue of Rs.6172.96 Cr is included in earnings.
|BSE Code||Not Listed Yet|
Sumaya Lifestyle is a lifestyle and fashion Sector firm. The company’s overall book value is Rs.244. The price of one share of the firm is currently not published on the BSE market and is 67.40 on the NSE market. In the year 2011, the firm was founded.
According to the company’s report, overall income for the previous year was Rs.210.717 crores, with total sales of Rs.210.697 crores. The net profit of the firm was Rs 8.161 crore. In the current fiscal year, Sumaya Lifestyle paid tax of Rs NaN Crore.
- The stock is now selling at a price of 0.28 times its book value.
- The company is predicted to deliver a strong quarter.
- The company has a strong return on equity (ROE) history: 124.38 percent ROE after three years
- The number of debtor days has decreased from 151.95 to 25.64.
- Over the previous quarter, promoter holdings have climbed by 4.77 percent.
- It’s possible that the company is capitalising interest costs.
Jindal Poly Invest
Another firm in the financial services industry is Jindal Poly Investment & Finance Company Limited (Jindal Poly Invest). The company’s entire worth (market value) is 273 crores. Today, one share of the firm costs 255.85 on the BSE market and 256.80 in the NSE market. In the year 2012, the firm was founded.
According to the company’s report, total income for the previous year was Rs.0.026 crores, with total sales of Rs.0 crores. The net profit of the corporation was -393.858 crores. In the current fiscal year.
- The stock is now selling at a discount to its book value of 0.11 times.
- The company is predicted to have a solid quarter. The company has had a good profit growth rate of 28.58 percent CAGR over the previous five years.
- A total of Rs.432.60 crore is included in earnings.
- The number of days owed to creditors has risen from 76.14 to 92.04.
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