Top Undervalued Stocks in India: The simplest means to make money in the stock market is to find stocks that are ignored and priced lower than their actual value. Once this is done simply wait until the stock eventually rallies to harvest your profits.
But however simple this may sound, finding an undervalued stock takes a lot of time and effort. After all, there are over 7400 companies listed on the NSE. This is a herculean task for anyone. But we’ve got you covered! In this article, we take a look at some of the Top Undervalued Stocks in India to Watch in 2023. Keep Reading to find out!
Table of Contents
How have we looked for undervalued stocks?
In this article, we have gone through multiple industries to find the top undervalued stocks in India.
Similar to performing technical and fundamental analysis which involve several important parameters which define if the stock should even be considered, here too we have selected stocks based on several parameters.
To start with the most popular valuation ratio is the PE ratio. Here we have included stocks that are trading way below their peers in their respective industries only after considering the PEG ratio.
In addition to this, we also take a look at the growth the company has offered in the past across its sales and profit. Other parameters which we have included are its ROE, ROCE, and also Dividend yield.
Again coming back to minimizing risk we also consider the debt and the company’s ability to pay the current interest incurred. Now that you’ve understood based on what these stocks have been selected let us take a look at the top undervalued stocks in the country.
Top Undervalued Stocks in India to Watch in 2023
Here we take a look at the Top Undervalued Stocks in India:
Top Undervalued Stocks in India #1 – Globus Spirits
| Face Value (₹): 10 | Market Cap (Cr): ₹2,254 |
| EPS (₹): 48.1 | Promoter’s Holdings (%): 51 |
| Debt to Equity: 0.31 | Dividend Yield (%): 0.37 |
| ROE (%): 27.5 | Stock P/E (TTM): 16.3 |
| Current Ratio: 1.35 | Net Profit Margin: 11.9% |
Globus Spirits Ltd. was founded in 1992 and since then has come a long way in a short period of time. The company caters to four segments i.e. Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), IMFL Bottling, and Bulk Alcohol. It currently has a market cap of Rs. 3,100 cr.
Although not forming among the top 3 stocks in the Indian alcohol industry, Globus Spirits comes with its own set of positives. The stock currently trades at a PE ratio of 16.3 which is way below its industry average PE of 29.6. In addition to this, the stock also has a PEG ratio of 0.26 further showing that it is undervalued.
The company’s debt status further brings more good news with a low debt-equity ratio of 0.31. The company has the ability to pay its interest multiple times over with an interest coverage ratio of 22.0.
The company’s profits and its sales have given a compounded growth of 83% and 17% over the last three years. The company also maintains a good ROE ratio of 27.5 with a ROCE of 33.8%. The firm also has good liquidity to meet its immediate needs with a current ratio of 1.35.
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Top Undervalued Stocks in India #2 – Vindhya Telelink
| Face Value (₹): 10 | Market Cap (Cr): ₹1,913 |
| EPS (₹): 123 | Promoter’s Holdings (%): 43.5 |
| Debt to Equity: 0.22 | Dividend Yield (%): 0.61 |
| ROE (%): 6.32 | Stock P/E (TTM): 13.1 |
| Current Ratio: 2.02 | Net Profit Margin: 14.6% |
Founded in 1983, Vindhya Telelinks is a leading manufacturer and supplier of jelly-filled telecommunication cables and optical fiber telecommunication cables. Despite being one of the smallest companies on this list it still comes with many positives.
The stock currently trades at a PE ratio of 13.1 which is way below its industry average PE of 48.5. It currently has a market cap of Rs. 1,913 cr.
The company’s debt status further brings more good news with a low debt-equity ratio of 0.22. The company has the ability to pay its interest multiple times over with an Interest coverage ratio of 4.37. Its profit growth over the last 3 years beats its sector leader Sterlite Tech.
Its ROE however is a little disappointing at 6.32% with a ROCE of 8.49 %. The firm also has good liquidity to meet its immediate needs with a current ratio of 2.02.
Top Undervalued Stocks in India #3 – UPL Ltd.
| Face Value (₹): 2 | Market Cap (Cr): 53,698 |
| EPS (₹): 55.1 | Promoter’s Holdings (%): 30.7 |
| Debt to Equity: 1.34 | Dividend Yield (%):1.43 |
| ROE (%): 16.7 | Stock P/E (TTM): 12.4 |
| Current Ratio: 1.36 | Net Profit Margin: 10.1% |
Founded in 1969, UPL Ltd. is the largest and top agriculture company in India. The company manufactures and markets crop protection products, intermediates, and specialty chemicals, among other industrial chemicals.
This Indian MNC however is one of the top 5 players in the global agrochemicals industry with its products sold in over 138 countries. The company has a market cap of Rs. 53,698 cr.
Despite being the market leader the company still finds its way into the undervalued list. The stock currently trades at a PE ratio of 12.4 which is way below its industry average PE of 23.3. In addition to this, the stock also has a PEG ratio of 0.75 further showing that it is undervalued.
The company maintains a good debt-equity ratio of 1.34 which is still manageable. The company has the ability to pay its interest multiple times over with an Interest coverage ratio of 3.12.
The company’s compounded profits and sales growth over the last 3 years have grown at 28% and 28%. Its sales growth for 3 years beats all of its peers in the sector except India Pesticides which has also achieved a sales growth of 28%.
The company also maintains a good ROE ratio of 16.7 with a ROCE of 15.6. The firm also has good liquidity to meet its immediate needs with a current ratio of 1.36.
Top Undervalued Stocks in India #4 – JK Lakshmi
| Face Value (₹): 5 | Market Cap (Cr): 8,842 |
| EPS (₹): 35.7 | Promoter’s Holdings (%): 46.3 |
| Debt to Equity: 0.71 | Dividend Yield (%): 0.66 |
| ROE (%): 20 | Stock P/E (TTM): 20.1 |
| Current Ratio: 1.03 | Net Profit Margin: 8.76% |
If we take a look at the cement industry the sector includes many large players who have dominated the industry. Amongst them includes JK Lakshmi cement which is also a well-established cement company.
The company forms part of the JK Organisation group. The company has a good presence across India barring the south with an annual turnover of over Rs. 4000 crores. The company has a market cap of Rs. 8,842 cr.
The stock currently trades at a PE ratio of 20.1 which is below its industry average PE of 26.5. In addition to this, the stock also has a PEG ratio of 0.31 further showing that it is undervalued.
The company maintains a good debt-equity ratio of 0.71 which is still manageable. The company has the ability to pay its interest multiple times over with an interest coverage ratio of 5.41.
The company’s compounded profits and sales over the last 3 years stand at 167% and 8%. Its profit growth over the last 3 years beats all the other top companies in the sector. In addition to this, its sales growth for 3 years is one of the tops in the sector.
The company also maintains a good ROE ratio of 20% with a ROCE of 18.7%. The firm’s liquidity to meet its immediate needs is slightly low with a current ratio of 0.77.
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Top Undervalued Stocks in India #5 – Laurus Labs Ltd
| Face Value (₹): 2 | Market Cap (Cr): ₹17,851 |
| EPS (₹): 16.4 | Promoter’s Holdings (%): 27.2 |
| Debt to Equity: 0.51 | Dividend Yield (%): 0.60 |
| ROE (%): 24.6 | Stock P/E (TTM): 20.3 |
| Current Ratio: 1.30 | Net Profit Margin: 16.0% |
Founded in 2005, Laurus Labs is a top pharmaceutical firm in India focused on research and development, possessing a leadership position in select generic active pharmaceutical ingredients. The company has a market cap of Rs. 17,851 cr.
The stock currently trades at a PE ratio of 20.3 which is well below its industry average PE of 26.2. In addition to this, the stock also has a PEG ratio of 0.67 further showings that it is trading at a fair price.
The company maintains a good debt-equity ratio of 0.51 which is still manageable. The company has the ability to pay its interest multiple times over with an interest coverage ratio of 9.95.
The company’s compounded profit and sales over the last 3 years stand at 99% and 28%. The company also maintains a good ROE ratio of 24.6% with a ROCE of 23.4%. The firm also has good liquidity to meet its immediate needs with a current ratio of 1.30.
In Closing
These are some stocks that we feel have a lot of untapped potential in them. However, an investor must also perform an analysis and also look into the company’s future plans before making any investments. Let us know what you think about this list. Would you like part 2 of this piece? Let us know in the comments below. Happy Investing!
You can now get the latest updates in the stock market on Trade Brains News and you can even use our Trade Brains Portal for fundamental analysis of your favorite stocks.
Frequently Asked Questions (FAQs)
- How do you know if a stock is undervalued in India?
To know if a stock is undervalued, check if the stock is trading below its true intrinsic value. You can find the Intrinsic value of a stock by using Discounted Cash flow Approach or any other valuation method. Another way is finding stock value is relative valuation where we can compute the company’s value with the stocks in the same industry. Here, you can compare the PE ratio of the stock with the PE ratio of other stocks in the same industry.
- Is it good to buy undervalued stocks?
Absolutely! Prices of undervalued stocks return to their intrinsic value sooner or later. Buying an undervalued stock means that you are getting to buy it at a relatively low price and it is assured that you will get a good profit once the price increases to its intrinsic value or beyond it. If the fundamentals are good, do not miss them.
- Where can I find undervalued stocks?
A few websites like Screener, Tradebrains Portal, Yahoo Finance, MoneyControl, and so on provide a ready list of stocks that are undervalued. From this list, you can pick a few stocks and determine their intrinsic value. You can study its fundamentals and then decide if they are undervalued and if you would like to invest in one or a few of those companies.
- How does Warren Buffett find undervalued stocks?
Warren Buffet follows the principles of value investing. He does fundamental analysis and buys stocks of companies that are unfairly undervalued. He isn’t worried about the performance of the stock in the stock market for the short term as he doesn’t seek capital gains. Instead, he likes having ownership in quality companies that are extremely capable of generating earnings.
He is concerned about how well a company can make money as a business. He checks various ratios like Return on Equity (ROE), Debt to equity ratio, profit margins, etc. If there is a wide difference between the market price and true value, it is undervalued.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
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Yes, I would like more of such research
Would like to have more such stock analysis. The above piece is highly informative.
It will be wonderful to know about the under valued corporate shares. May enable new entries to learn about these shares and start investing, Continue your effort to update more. Thankyou.
Looks good. Appreciate receiving more like this.
Good analysis
Very good analysis. Looking forward such stock analysis.
Yes. Please forward some more such valuable info. Thanks
This is very informative and would love more of such research.
Good information… Hope to follow your Tips…. Keep going… Tq
Looks good. Keep going
Good analysis.
Another such undervalued stoch in my view is IFB agro. Recently it was raised to 870 from 600 levels. If mangement acts towards co growth and rewarding investors, this will be a bmulti bagger returns co in future.
All above stocks are at above 70% level of 52 week high and low.
In article you would have given cmp on article date.