Top Value Stocks in India: Let’s say, you go shopping and find a suitcase priced at ₹ 5,000. You like it but hesitate to buy it because you feel that it is too expensive. In your opinion, it is worth about ₹ 3,500. At this point, you postpone your purchase and wait for a sale so that you get it at a discount.
In other words, you prefer buying things at an appropriate value. The suitcase serves the same purpose whether you buy it at ₹ 5,000 or ₹ 3,500. But, common sense tells us that buying it at ₹ 3,500 is a better deal.
When it comes to stocks, a few novice investors buy impulsively. However, the concept of buying at an appropriate value applies to stocks as well. The share price of a company’s stock keeps changing even when its value has remained the same.
Now, investors cannot wait for a Black Friday sale in the stock market. What they can do, though, is a little treasure hunt to find stocks available at a discount, or close to their worth.
In this article, we’ll understand the meaning of value investing, and reasons why stocks become undervalued, and take a look at 5 value stocks to watch in 2023. Keep reading to find out.
Table of Contents
What is Value Investing?
Value investing is an investment strategy that involves picking stocks that appear to be trading at less than their value. Value investors typically analyze financial statements, results, business models, and other qualitative, quantitative, and perceptual data about companies to arrive at a measure called intrinsic value.
Intrinsic value, in simple words, is a measure of what an asset is worth. Value investors pick stocks that appear to be trading at less than their intrinsic value.
Some of the most famous names in the value investing community include Warren Buffet, Benjamin Graham, Charlie Munger, and Mohnish Pabrai among others. These investors find undervalued or deeply discounted stocks of strong companies and hold them for the long term to earn excellent returns.
When stocks are undervalued, it means that their intrinsic value is more than their market price, i.e., they are available at a discount. If the company has the potential to grow, the market price will eventually increase to reach its intrinsic value. This difference is used to make massive returns.
Why do stocks become undervalued?
Value investors believe that stocks become undervalued for a variety of reasons. For example, when an economy is performing poorly investors begin to panic and start selling. News, unexpected or disappointing earnings announcements by companies, product recalls, litigations, and herd mentality can push prices lower.
Some stocks may be trading at low prices because they are under the radar or are inadequately covered by analysts and the media.
Top Value Stocks in India to Watch in 2023
A few parameters that investors should look for while investing in value stocks are a company’s long-term business plans, its business principles, financial stability, the effectiveness of the management, and valuation multiples like price-to-earnings ratio, price-to-book value, price-to-sales, and the like. Here are five value stocks to watch in 2023:
Top Value Stocks in India #1 – Manali Petrochemicals
Manali Petrochemicals manufactures and sells Propylene Oxide (PO), Propylene Glycol (PG) Polyols (PY), and other products which are used as industrial raw materials. It also finds application in automotive, appliances, building & construction, energy, defense, paints and coatings, soft furniture and so on.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Total Income (in Crores) | ₹747.78 | ₹810.25 | ₹803.05 | ₹1,024.48 | ₹1,671.94 |
| Profit (in Crores) | ₹57.90 | ₹76.59 | ₹46.66 | ₹201.23 | ₹381.08 |
| Net Profit Margin | 7.74 % | 9.45 % | 5.81 % | 19.64 % | 22.79 % |
The company’s revenue, net profit and net profit margin show an increasing trend. Its revenue grew at a CAGR of 22.28% and its net profit at 60.17%.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 5 | ROE (%) | 44.56 |
| Market Cap (₹ in Cr) | 1,178.19 | PEG | 0.17 |
| EPS (₹) | 7.27 | Current Ratio | 4.92 |
| Stock P/E (TTM) | 9.42 | Debt to Equity | 0.02 |
| Industry P/E | 13.60 | Promoter’s Holdings (%) | 44.9 |
| Dividend Yield (%) | 2.31 | Price-to-Book Value | 1.11 |
The company’s shares are trading at a price-to-earnings ratio (P/E) of 9.42, which is lower than the industry P/E of 13.60, indicating that the stock is undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 0.11, which is below 1 indicating that the stock might be undervalued.
Manali Petrochemicals is a small-cap company with a market capitalization of ₹ 1,178.19 crores. It has earnings per share (EPS) of ₹ 7.27, a good dividend yield of 2.31% and an ideal debt-to-equity ratio of 0.02. Further, it has an excellent return on equity of 44.56, and a good net profit margin of 22.79. The company has a good current ratio of 4.92, indicating that its assets are nearly five times its liabilities.
Top Value Stocks in India #2: Oracle Financial Services
Oracle Financial Services Software Ltd provides financial software, custom application development, consulting, IT infrastructure management, and outsourced business processing services to the financial services industry. The company was incorporated in 1989 and is based in Mumbai, India, and is a subsidiary of Oracle Global (Mauritius) Limited.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Revenue (in Crores) | ₹4,527.47 | ₹4,958.90 | ₹4,861.28 | ₹4,983.94 | ₹5,221.46 |
| Profit (in Crores) | ₹1,237.04 | ₹1,385.90 | ₹1,462.22 | ₹1,761.86 | ₹1,888.83 |
| Net Profit Margin | 27.32 % | 27.95 % | 30.08 % | 35.35 % | 36.17 % |
The company’s revenue, net profit, and net profit margin show an increasing trend. Its revenue grew at a CAGR of 3.63% and its net profit at 11.16%.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 5 | ROE (%) | 27.69 |
| Market Cap (₹ in Cr) | 27,434.97 | PEG | 1.69 |
| EPS (₹) | 209.35 | Current Ratio | 6.72 |
| Stock P/E (TTM) | 15.1 | Debt to Equity | 0 |
| Industry P/E | 71.36 | Promoter’s Holdings (%) | 72.99 |
| Dividend Yield (%) | 5.29 | Price-to-Book Value | 4.46 |
The company’s shares are trading at a price-to-earnings ratio of 15.1, which is significantly lower than the industry P/E of 71.36, indicating that the stock might be undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 1.69.
Oracle Financial Services is a mid-cap company with a market capitalization of ₹ 27,434.97 crores. It has earnings per share (EPS) of ₹ 209.35, a high dividend yield of 5.29%, and an ideal debt-to-equity ratio of 0. Further, it has a good return on equity of 27.69, and a good net profit margin of 36.17. The company has a good current ratio of 6.72, indicating that its assets are more than six times its liabilities.
Top Value Stocks in India #3 – Power Finance Corporation
Power Finance Corporation Limited is a Systemically Important Non-Deposit taking NBFC (Non-Banking Financial Company) registered with the RBI as an infrastructure finance company. It is engaged in extending financial assistance to the Indian power sector.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Revenue (in Crores) | ₹48,623.83 | ₹53,842.11 | ₹62,862.64 | ₹71,709.49 | ₹76,660.79 |
| Profit (in Crores) | ₹8,775.34 | ₹12,596.02 | ₹9,455.82 | ₹15,709.96 | ₹18,790.61 |
| Net Profit Margin | 18.05 % | 23.39 % | 15.04 % | 21.91 % | 24.51 % |
The company’s revenue, net profit, and net profit margin show an increasing trend. However, its revenue grew at a 4-year CAGR of 12.05%, and its net profit at 20.31%.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 10 | ROE (%) | 28.38 |
| Market Cap (₹ in Cr) | 38,479.19 | PEG | 0.06 |
| EPS (₹) | 53.55 | Current Ratio | 3.29 |
| Stock P/E (TTM) | 2.72 | Debt to Equity | 9.21 |
| Industry P/E | 13.89 | Promoter’s Holdings (%) | 55.99 |
| Dividend Yield (%) | 10.67 | Price-to-Book Value | 0.50 |
The company’s shares are trading at a price-to-earnings ratio of 2.72, which is significantly lower than the industry P/E of 13.89, indicating that the stock might be undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 0.06, which is lower than 1 indicating that the stock might be fairly priced or even undervalued.
Power Finance Corporation is a large-cap company with a market capitalization of ₹ 38,479.19 crores. It has earnings per share (EPS) of ₹ 53.55, a high dividend yield of 10.67% and an ideal debt-to-equity ratio of 9.21. Further, it has a good return on equity of 28.38, and a good net profit margin of 24.51. The company has a good current ratio of 3.29, indicating that its assets are more than three times its liabilities.
Top Value Stocks in India #4 – Steel Authority of India
Steel Authority of India Limited (SAIL) is one of the largest steel-making companies in India. It is a Maharatna CPSE that produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. SAIL manufactures and sells a broad range of steel products.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Revenue (in Crores) | ₹57,560.02 | ₹66,973.58 | ₹61,664.16 | ₹69,113.61 | ₹ 1,03,476.84 |
| Profit (in Crores) | -₹566.26 | ₹2,125.84 | ₹1,926.39 | ₹4,148.13 | ₹12,243.47 |
| Net Profit Margin | – 0.98 % | 3.17 % | 3.12 % | 6 % | 11.83 % |
The company’s revenue, net profit and net profit margin show an increasing trend. Its revenue grew at a 4-year CAGR of 15.79% and its net profit at a 3-year CAGR of 73.39%.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 10 | ROE (%) | 24.58 |
| Market Cap (₹ in Cr) | 34,902.94 | PEG | 0.23 |
| EPS (₹) | 10.85 | Current Ratio | 0.73 |
| Stock P/E (TTM) | 7.79 | Debt to Equity | 0.32 |
| Industry P/E | 12.00 | Promoter’s Holdings (%) | 65.00 |
| Dividend Yield (%) | 8.88 | Price-to-Book Value | 0.65 |
The company’s shares were trading at a price-to-earnings ratio of 7.79 which is lower than the industry P/E of 12.00 indicating that the stock might be undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 0.23, which is lower than 1 indicating that the stock might be fairly priced or even undervalued.
Steel Authority Of India is a large-cap company with a market capitalization of ₹ 34,902.94 crores. It has earnings per share (EPS) of ₹ 10.85, a high dividend yield of 8.88% and an ideal debt-to-equity ratio of 0.32. Further, it has a good return on equity of 24.58, and a net profit margin of 11.83. The company has a low current ratio of 0.73, indicating that its liabilities are more than its assets.
Top Value Stocks in India #5 – REC
REC is a Central Public Sector Undertaking under the Ministry of Power involved in financing projects in the complete power sector value chain from generation to distribution.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Revenue (in Crores) | ₹ 22,651.6 | ₹25,399.02 | ₹29,951.65 | ₹35,552.84 | ₹39,281.83 |
| Profit (in Crores) | ₹4,439.85 | ₹5,731.43 | ₹4,963.13 | ₹8,380.21 | ₹10,047.50 |
| Net Profit Margin | 19.6 % | 22.57 % | 16.57 % | 23.57 % | 25.58 % |
The company’s revenue, net profit, and net profit margin show an increasing trend. Its revenue grew at a 4-year CAGR of 14.76% and its net profit at a 4-year CAGR of 22.54%.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 10 | ROE (%) | 21.39 |
| Market Cap (₹ in Cr) | 30,795.55 | PEG | 0.3 |
| EPS (₹) | 39.51 | Current Ratio | 0.23 |
| Stock P/E (TTM) | 2.97 | Debt to Equity | 6.49 |
| Industry P/E | 13.89 | Promoter’s Holdings (%) | 52.63 |
| Dividend Yield (%) | 12.44 | Price-to-Book Value | 0.54 |
The company’s shares are trading at a price-to-earnings ratio of 2.97 which is significantly lower than the industry P/E of 13.89, indicating that the stock might be undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 0.30, which is lower than 1 indicating that the stock might be fairly priced or even undervalued.
REC is a mid-cap company with a market capitalization of ₹ 30,795.55 crores. It has earnings per share (EPS) of ₹ 39.51, a high dividend yield of 12.44% and an ideal debt-to-equity ratio of 6.49. Further, it has a good return on equity of 21.39, and a net profit margin of 25.58%. The company has a low current ratio of 0.23, indicating that its liabilities are more than its assets.
Top Value Stocks in India #6 – Manappuram Finance
Manappuram Finance is a systemically important Non-Banking Finance Company (NBFC). It provides a wide range of fund-based and fee-based services including gold loans, money exchange facilities, and so on.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Total Income (in Crores) | ₹3,420.76 | ₹4,179.51 | ₹5,465.32 | ₹6,330.55 | ₹6,061.02 |
| Profit (in Crores) | ₹675.97 | ₹948.55 | ₹1,480.32 | ₹1,724.96 | ₹1,328.70 |
| Net Profit Margin | 19.76 % | 22.7 % | 27.09 % | 27.25 % | 21.92 % |
The company’s revenue grew at a CAGR of 15.37% and net profit at 18.4%. Its net profit margin showed an increasing trend until 2021. However, it declined in 2022.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 2 | ROE (%) | 16.98 |
| Market Cap (₹ in Cr) | 9,788.56 | PEG | 0.62 |
| EPS (₹) | 15.88 | Current Ratio | 2.54 |
| Stock P/E (TTM) | 7.27 | Debt to Equity | 2.89 |
| Industry P/E | 25.73 | Promoter’s Holdings (%) | 35.20 |
| Dividend Yield (%) | 2.64 | Price-to-Book Value | 1.04 |
The company’s shares are trading at a price-to-earnings ratio of 7.27 which is significantly lower than the industry P/E of 25.73, indicating that the stock might be undervalued as compared to its peers. It has a price/earnings to growth ratio (PEG ratio) of 0.62, which is lower than 1 indicating that the stock might be fairly priced or even lower than one.
Manappuram Finance is a small-cap company with a market capitalization of ₹ 9,788.56 crores. It has earnings per share (EPS) of ₹ 15.88, a good dividend yield of 2.64%, and an ideal debt-to-equity ratio of 2.89. Further, it has a good return on equity of 16.98, and a net profit margin of 21.92%. The company has a low current ratio of 2.54 indicating that its assets are more than twice its liabilities.
Top Value Stocks in India #7 – Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories is a leading pharmaceutical company. It offers a portfolio of products and services, including Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical services (CPS), generics, biosimilars, and differentiated formulations.
| Year | 2018 | 2019 | 2020 | 2021 | 2022 |
| Total Income (in Crores) | ₹14,281.00 | ₹15,448.20 | ₹17,517.00 | ₹19,047.50 | ₹21,545.20 |
| Profit (in Crores) | ₹912.40 | ₹1,906.20 | ₹1,969.90 | ₹1,903.60 | ₹2,112.20 |
| Net Profit Margin | 6.39 % | 12.34 % | 11.25 % | 9.99 % | 9.8 % |
The company’s revenue grew at a CAGR of 10.83% and its net profit grew at a CAGR of 23.22%. In addition, its net profit margin has increased over the last five years.
| Particulars | Values | Particulars | Values |
| Face Value (₹) | 5 | ROE (%) | 11.55 |
| Market Cap (₹ in Cr) | 72,438.62 | PEG | 1.84 |
| EPS (₹) | 218.83 | Current Ratio | 1.82 |
| Stock P/E (TTM) | 19.89 | Debt to Equity | 0.18 |
| Industry P/E | 30.05 | Promoter’s Holdings (%) | 26.70 |
| Dividend Yield (%) | 0.7 | Price-to-Book Value | 3.29 |
The company’s shares were trading at a price-to-earnings ratio of 19.89 which is significantly lower than the industry P/E of 30.05, indicating that the stock might be undervalued as compared to its peers. It has a low price/earnings to growth ratio (PEG ratio) of 1.84, which is a good sign.
Dr. Reddy’s Laboratories is a large-cap company with a market capitalization of ₹72,438.62 crores. It has high earnings per share (EPS) of ₹ 218.83, a dividend yield of 0.7%, and an ideal debt-to-equity ratio of 0.18. Further, it has a return on equity of 11.55, and a net profit margin of 9.8%. The company has a low current ratio of 1.82 indicating that its assets are almost twice its liabilities.
In Closing
In this article, we took a look at the meaning of value investing, reasons why stocks become undervalued and 5 value stocks to watch in 2023. That’s all for this article. We hope to see you around. Happy investing until next time.
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Hey, there! Thank you for stopping by 🙂 Simran is a master graduate in commerce from Bangalore University, an NSE-certified Fundamental Analyst and a NISM-certified Research Analyst. She finds interest in investing and personal finance. Outside of work, you can find her painting, reading and going on long walks.
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Wow, what an informative article! I’m thoroughly impressed by the level of detail and insight provided. Thank you for sharing this valuable resource.
Very Informative.
Very Informative.