Investing in undervalued stocks offers an excellent opportunity to maximize returns while keeping risks relatively low. These stocks are usually trading below their intrinsic value, often as a result of market inefficiencies or short-term challenges.
Here are three such undervalued companies with high growth guidance:
Garden Reach Shipbuilders & Engineers Ltd
With a market capitalization of Rs.16,111 crore, Garden Reach Shipbuilders & Engineers Ltd’s share price closed at Rs.1,418.00 on Thursday, rising 2 percent from its previous close. The stock is currently trading at a P/E ratio (Price-to-earnings ratio) of 41.9, lower when compared to the industry average of 60.3.
Garden Reach Shipbuilders Ltd. aims to achieve a revenue target of Rs.10,000 crore by FY 2030, a more than threefold increase from the Rs.3,592 crore revenue reported at the end of the financial year 2024.
Garden Reach has also maintained its 25 percent revenue growth guidance for the current financial year, following a 34 percent yoy revenue increase for the June quarter.
Management further expressed confidence in maintaining profit-after-tax (PAT) margins of 8 percent in the coming quarters and years.
In Q2 FY25, Garden Reach Shipbuilders & Engineers Limited reported consolidated revenue of Rs.1,153 crore, marking a 28.7 percent increase YoY and net profit rose 21 percent to Rs.98 crore in the same period.
Oil & Natural Gas Corpn Ltd
With a market capitalization of Rs.3.15 lakh crore, ONGC’s share price on Thursday closed at Rs.251.10 per share, 0.7 percent lower than its previous close. The stock is currently trading at a P/E ratio (Price-to-earnings ratio) of 7.57, lower when compared to the industry average of 22.0.
The management of ONGC has provided a positive outlook for the company’s performance in FY25 and the coming years. For FY25, the revenue is expected to range between Rs.33,000 crore and Rs.35,000 crore.
Looking ahead, ONGC plans to achieve a 20 percent growth in total production over the next three years, increasing from 39.45 MMtoe to approximately 47 MMtoe by FY27. This growth will be driven by a 12 percent increase in oil production, expected to rise from 19.5 MMT to 22 MMT, and a 27 percent increase in gas production, which will grow from 20 BCM to around 25.5 BCM.
In Q2 FY25, ONGC reported consolidated revenue of Rs.1,58,329 crore, marking a 7.25 percent increase YoY, while net profit fell 39 percent to Rs.9,878 crore in the same period.
Cipla Ltd
With a market capitalization of Rs.1.21 lakh crore, Cipla’s share price on Thursday closed at Rs.1,501.30 per share, 0.4 percent lower than its previous close. The stock is currently trading at a P/E ratio (Price-to-earnings ratio) of 26.3, lower when compared to the industry average of 33.9.
Cipla has laid out its strategic plans for FY25 and beyond, allocating Rs.1,500 crore in capital expenditure to expand manufacturing capacity and enhance sustainability initiatives.
The company is preparing for significant product launches, including gAbraxane, gAdvair, and four peptide assets, with a targeted EBITDA margin of 24.5 percent to 25.5 percent, demonstrating confidence in operational improvements.
In India, Cipla anticipates a growth rate of around 10 percent, driven by branded generics and consumer health products, while continuing to lead the South African prescription market.
Furthermore, Cipla intends to allocate 6 percent to 7 percent of its revenue to R&D, fostering innovation and the development of unique products to support sustained growth in the pharmaceutical industry.
In Q2 FY25, Cipla reported consolidated revenue of Rs.7,051 crore, marking a 5.6 percent increase YoY, while net profit surged 13 percent to Rs.1,305 crore in the same period.
Written by – Siddesh S Raskar
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