Undervalued shares have a market value lower than their intrinsic value. They could be undervalued due to multiple reasons ranging from socio-economic, sector-specific, or overall market slowdown. Meanwhile, mid-cap stocks are those stocks that have a market capitalization between ₹ 16,800 and ₹ 49,800. One of the most common ways of finding undervalued stocks is by comparing their price-to-earnings (P/E) ratio with their historical P/E or with the industry P/E.
Here are a few midcap stocks that seem to be undervalued based on their price-to-earnings ratio (P/E), as compared with the industry P/E:
Jindal Stainless
Jindal Stainless is one of the largest manufacturers of stainless steel flat products. Its products are used in a variety of industries like automobiles, railways, construction, and consumer goods.
The company’s shares were trading at a price-to-earnings ratio of 12.28 which is lower than the industry P/E of 17.31, indicating that the stock might be undervalued as compared to its peers. It is a midcap stock with a market capitalization of ₹ 34,469 crores and a share price of ₹ 419.25.
Jindal Stainless has a high return on equity of 24.71 percent and an ideal debt-to-equity ratio of 0.33. Its promoters hold a 57.94 percent stake in it, followed by foreign institutions with 22.20 percent, retail investors with 16.56 percent, mutual funds with 2.99 percent and other domestic investors with 0.31 percent.
Oracle Financial Services Software
Oracle Financial Services Software provides financial software, custom application development, consulting, IT infrastructure management, and outsourced business processing services to the financial services industry.
The company’s shares were trading at a price-to-earnings ratio of 19.09 which is lower than the industry P/E of 51.11, indicating that the stock might be undervalued as compared to its peers. It is a midcap stock with a market capitalization of ₹ 34,574 crores and a share price of ₹ 4036.95.
Oracle Financial Services Software has an ideal return on equity of 24.81 percent and an ideal debt-to-equity ratio of 0.01. Its promoters hold a 72.90 percent stake in it, followed by retail investors with 11.07 percent, foreign institutions with 7.79 percent, domestic institutions with 4.55 percent and mutual funds with 3.69 percent.
Narayana Hrudayalaya
Narayana Hrudalaya is engaged in providing economical healthcare services. It has a network of multispecialty and super-speciality hospitals spread across multiple locations.
The company’s shares were trading at a price-to-earnings ratio of 29.58 which is lower than the industry P/E of 34.65, indicating that the stock might be undervalued as compared to its peers. It is a midcap stock with a market capitalization of ₹ 20,103 crores and a share price of ₹ 990.00.
Narayana Hrudayalaya has a high return on equity of 33.49 percent and an ideal debt-to-equity ratio of 0.41. Its promoters hold a 63.85 percent stake in it, followed by retail investors with 13.69 percent, foreign institutions with 11.10 percent, mutual funds with 9.08 percent and other domestic institutions with 2.01 percent.
Written by Simran Bafna
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