Undervalued Stocks

An undervalued stock is a stock that is trading at a price lower than its actual worth. This actual worth is called intrinsic value. It is based on how much profit the company is expected to make in the future. Other things like cash flow, debt levels, and return on assets also help in finding the intrinsic value.

When the market price is lower than this value, the stock is considered undervalued. These value stocks are often overlooked or mispriced by the market, presenting potential investment opportunities for value investors.

Top Undervalued Stocks in India

Name	Price	Analyst Rating	M Cap	Target Price	Alpha	1Y Return	3Y Return	5Y Return	PE	Industry PE	PB	Beta	Div Yld	Net Profit Qtr	Net Profit QoQ %	Net Profit YoY %	Net Profit 3Y Change %	Rev Qtr (in Cr)	Rev QoQ (in %)	Rev 1Y change %	Rev 3Y change %	Profit Mar Qtr	Profit Mar QoQ	Profit Mar 1Y Change%	Profit Mar 3Y Change%	Sector	M Cap	ROE	ROCE	EPS	Volume
ITC Ltd	₹324.75	HOLD	LARGE CAP	411.81	-33.54%	-25.43%	-3.39%	52.69%	11.74	22.57	7.55	0.51	3.5%	5186.55 Cr	-2.94%	68.92%	126.1%	19293.22	-9.73%	10.88%	24.16%	46.54%	7.53%	52.34%	82.11%	Consumer Defensive	408828.75	27.91%	36.71%	28.01	14177965
Asian Paints Ltd	₹2,661.10	HOLD	LARGE CAP	2806.03	9.24%	18.37%	-3.91%	-1.5%	65.84	60.07	11.81	0.65	1.06%	1018.23 Cr	-8.85%	-33.25%	20.26%	8513.7	-4.6%	-4.48%	16.51%	10.94%	-4.45%	-30.12%	3.22%	Basic Materials	256642.96	19.24%	25.04%	38.68	914318
Sun Pharmaceutical Industries Ltd	₹1,612.90	BUY	LARGE CAP	1964.76	-17.33%	-8.45%	53.8%	176.86%	37.01	40.85	17.11	0.77	0.92%	3137.09 Cr	36.24%	13.8%	222.39%	14405.22	4.49%	8.42%	36.02%	20.88%	30.38%	4.97%	137.02%	Basic Materials	387204.68	17.83%	16.29%	45.76	3947877
Avenue Supermarts Ltd	₹3,656.70	HOLD	LARGE CAP	4141.33	-6.79%	2.06%	6.63%	34.66%	83.16		11.94	0.75	NA	855.78 Cr	24.96%	6.78%	81.42%	18100.88	8.54%	16.87%	91.62%	4.56%	15.12%	-8.64%	-5.33%	Consumer Defensive	238272.42	14.1%	18.47%	41.61	473540
Coal India Ltd	₹414.05	BUY	LARGE CAP	409.17	-0.79%	8.85%	80.49%	202.37%	8.2	17.73	13.59	0.91	6.65%	4262.64 Cr	-51.2%	-5.53%	103.14%	26909.23	-15.59%	-0.96%	30.67%	24.62%	-42.18%	-4.61%	55.45%	Basic Materials	255938.11	96.15%	70.32%	57.28	7312100
Varun Beverages Ltd	₹478.00	BUY	LARGE CAP	597.81	-19.63%	-9.68%	97.72%	495.74%	55.64	58.66	13.04	1.01	0.16%	745.19 Cr	-43.78%	25.33%	253.1%	4896.65	-30.22%	24.72%	126.76%	13.17%	-19.43%	0.5%	55.71%	Consumer Defensive	165413.07	19.64%	22.98%	7.79	5819986
Eicher Motors Ltd	₹7,140.00	BUY	LARGE CAP	7213.26	34.9%	44.34%	123.94%	145.11%	38.51	39.92	7.93	0.94	1.31%	1369.45 Cr	13.63%	18.33%	182.38%	6071.19	22.76%	14.12%	83.25%	25.09%	-7.44%	3.69%	54.1%	Consumer Cyclical	196768.56	25.03%	30.32%	172.66	480751
Bharat Electronics Ltd	₹402.65	BUY	LARGE CAP	463.81	35.14%	46.72%	303.1%	817.21%	52.55	54.63	11.18	1.03	0.8%	1278.42 Cr	33.08%	34.09%	124.56%	5792.09	30.46%	17.27%	54.66%	22.24%	2.01%	14.34%	45.19%	Consumer Cyclical	299225.8	29.56%	37.49%	7.23	19150437
ABB India Ltd	₹4,707.50	HOLD	LARGE CAP	5275.54	-36.19%	-25.31%	59.16%	240.63%	56.35	57.74	20.71	1.19	NA	409.04 Cr	16.29%	-23.7%		3285.33	4.48%	2.13%		1.85%	11.31%	-25.29%		Industrials	99416.81	28.75%	38.43%	5.52560526008916	349292
Dr Reddys Laboratories Ltd	₹1,157.20	HOLD	MID CAP	1296	-18.5%	-9.43%	34.48%	15.46%	16.83	40.85	3.31	0.84	0.7%	1336.8 Cr	-5.18%	2.64%	162.32%	8804.9	3.04%	16.54%	51.51%	17.54%	-7.98%	-11.93%	73.14%	Basic Materials	97376.32	20.15%	25.47%	68.65	2322066

Name	Price	Analyst Rating	M Cap	Target Price	Alpha	1Y Return	3Y Return	5Y Return	PE	Industry PE	PB	Beta	Net Profit Qtr	Net Profit QoQ %	Net Profit YoY %	Net Profit 3Y Change %	Rev Qtr (in Cr)	Rev QoQ (in %)	Rev 1Y change %	Rev 3Y change %	Profit Mar Qtr	Profit Mar QoQ	Profit Mar 1Y Change%	Profit Mar 3Y Change%	Sector	M Cap	ROE	ROCE	EPS	Volume
Adani Power Ltd	₹137.63	BUY	LARGE CAP	186	18.32%	30%	151.61%	1178.88%	22.49	26.8	4.74	1.21	2906.46 Cr	-12.06%	-38.79%	159.58%	13456.84	-4.62%	11.62%	102.82%	22.68%	-7.8%	-45.16%	27.99%	Utilities	265125.98	26.75%	21.83%	6.612	19416781
Tata Motors Passenger Vehicles Ltd	₹339.25	HOLD	LARGE CAP	372.08	-36.01%	-55.59%	-17.27%	16.26%	17.82	39.92	7.42	1.38	76248 Cr	1804.77%	-11.5%	-350.55%	71714	-17.7%	1.31%	57.91%	6.4%	2214.52%	-12.64%	-258.67%	Consumer Cyclical	124407.57	17.15%	18.21%	46.3048163304841	9873473
AWL Agri Business Ltd	₹208.91	BUY	SMALL CAP	317.5	-28.42%	-21.66%	-61.52%	-21.7%	25.12	58.66	3.57	0.64	227.55 Cr	-1.82%	581.69%	50.22%	17604.57	3.2%	24.21%	17.57%	1.83%	-4.87%	448.82%	27.77%	FMCG	27298.45	13.78%	20.03%	8.98	1654274
Infosys Ltd	₹1,654.40	BUY	LARGE CAP	1817.07	-16.6%	-7.87%	7.16%	23.83%	24.54	31.9	7.47	1.23	6666 Cr	-9.61%	1.91%	20.79%	45479	2.22%	6.06%	33.99%	16.41%	-11.58%	-3.91%	-9.85%	Technology	672630	30.35%	39.64%	64.52	6224582
Tata Steel Ltd	₹184.41	BUY	LARGE CAP	190.9	31.33%	41.53%	50.46%	175.33%	33.62	27.59	1.21	1.44	3183.09 Cr	58.57%	-164.64%	-92.4%	58216.04	10.37%	-4.64%	-10.42%	1.45%	43.67%	-167.79%	-91.51%	Industrials	229147.62	9%	10.52%	2.54	35037961
Yes Bank Ltd	₹21.66	SELL	MID CAP	19.33	6.55%	17.3%	19.56%	25.8%	21.49	15.73	1.11	0.98	956.55 Cr	43.99%	90.36%	129.92%	9272.31	1.75%	12.48%	65.34%	6.6%	41.52%	69.23%	39.06%	Financial Services	68092.37	4.51%	NA	0.78	133777591
Eternal Ltd	₹283.50	BUY	LARGE CAP	377.74	4.36%	25.66%	428.63%	113.97%	1283.81	-170.68	5.36	1.42	102 Cr	56.92%	50.14%	-143.11%	16315	20.05%	67.1%	382.85%	2.6%	30.71%	-10.15%	-108.93%	Technology	260173.45	6.33%	7.08%	0.58	71728259
ITC Ltd	₹324.75	HOLD	LARGE CAP	411.81	-33.54%	-25.43%	-3.39%	52.69%	11.74	22.57	7.55	0.51	5186.55 Cr	-2.94%	68.92%	126.1%	19293.22	-9.73%	10.88%	24.16%	46.54%	7.53%	52.34%	82.11%	Consumer Defensive	408828.75	27.91%	36.71%	28.01	14177965
Wipro Ltd	₹239.55	HOLD	LARGE CAP	264.23	-28.19%	-19.59%	17.89%	7.63%	18.93	31.9	4.36	1.13	3145 Cr	-3.6%	18.95%	7.96%	23555.8	3.78%	-0.75%	12.33%	14.84%	-7.11%	19.85%	-3.89%	Technology	251587.89	17.89%	21.54%	12.62	14397792
HDFC Bank Ltd	₹920.35	BUY	LARGE CAP	1169.15	4.7%	13.4%	11.31%	26.28%	19.17	15.73	2.79	0.86	19806.63 Cr	1%	10.51%	86.04%	126927.27	7.06%	15.42%	180.82%	15.03%	-5.66%	-4.26%	-33.75%	Financial Services	1432611.83	14.3%	NA	47.985	32766854

Why should you invest in undervalued stocks?

1. Lower Risk

Compared to their overvalued counterparts, undervalued stocks inherently carry less risk. Since they are bought at a price lower than their actual value, the downside risk is minimised. This makes them an appealing option for conservative investors seeking safer investment avenues.

2. Potential for Substantial Returns

Investing in undervalued stocks provides an opportunity for significant returns. Once the market corrects its initial misjudgments, these stocks can appreciate considerably as they return to their true values, offering profitable outcomes for those who invested early.

3. Capitalising on Market Overreactions

The stock market is prone to emotional reactions, often resulting in stock mispricing. Astute investors can capitalize on this by purchasing stocks when they are unfairly devalued and waiting for the market’s inevitable correction.

4. Dividend Advantage

Often, undervalued stocks belong to established companies with stable dividend payouts. Investors can benefit from regular dividends while waiting for the stock’s price to adjust, ensuring a dual income stream through capital gains and dividends.

Frequently Asked Questions

How are undervalued stocks identified?

There are several methods to identify undervalued stocks, including analysing financial ratios like price-to-earnings (P/E), price-to-book (P/B), and price-to-cash-flow (P/CF) ratios, which can indicate if a stock is undervalued compared to its peers or historical averages. Qualitative factors like competitive advantages, management quality, and growth potential are also considered.

What are the potential benefits of investing in undervalued stocks?

The primary benefit of investing in undervalued stocks is the potential for higher returns when the market eventually recognises the stock's true value, leading to price appreciation.

What are the risks associated with undervalued stocks?

Undervalued stocks may remain undervalued for an extended period, leading to opportunity costs. Additionally, there is a risk that the stock is undervalued due to underlying fundamental issues with the company, which may lead to further price declines.