Companies with high promoter holdings are typically considered to be safer to invest in, as compared to those companies with lower stakes. When the promoters think that their stock is worth buying, they increase their stake in it or maintain a high shareholding. It could also mean that they believe that the company’s share price will increase and therefore they hold a high stake in it.
Here are a few midcap undervalued stocks with high promoter holding. The price-to-earnings ratio (P/E) of these companies is lower than the industry P/E. They have a 6-month average market capitalization between ₹ 16,800 crores to ₹ 49,000 crores as per the Association of Mutual Funds of India’s (AMFI) classification of stocks.
Indian mutual funds follow this classification while buying stocks. The first 100 companies with the highest market capitalization are large-cap companies, the next 150 companies are midcap companies and the remaining companies are small-cap companies.
Colgate Palmolive India
The FMCG company’s promoters hold a 51.00% stake in it. The company has a market capitalization of ₹ 39,660 crores and is a midcap company. Its shares were trading at a price-to-earnings ratio (P/E) of 37.61, which is lower than the industry P/E of 58.78, indicating that its shares might be undervalued as compared to its peers.
NMDC
NMDC is engaged in the exploration and production of iron ore, production of diamonds, sale of sponge iron and generation and sale of wind power. Its promoters hold a 60.79% stake in it. The company has a market capitalization of ₹ 34,962 crores and is a midcap company. Its shares were trading at a price-to-earnings ratio (P/E) of 6.80, which is lower
than the industry P/E of 12.25, indicating that its shares might be undervalued as compared to its peers.
Emami
The company manufactures personal care and healthcare products. Its promoters hold a 54.27% stake in it. Emami has a market capitalization of 17,211 crores and is a midcap company. The company’s shares were trading at a price-to-earnings ratio (P/E) of 20.27, which is lower than the industry P/E of 59.78, indicating that its shares might be undervalued as compared to its peers.
Written by Simran Bafna
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