Exploring Three Indian Exchange Stocks Estimated To Be Up To 43.8% Below Intrinsic Value
The Indian market has shown robust growth, climbing 1.2% in the past week and achieving a 45% increase over the last year, with earnings expected to grow by 16% annually. In this thriving environment, identifying stocks that are trading below their intrinsic value could present opportunities for investors seeking potential gains.
Top 10 Undervalued Stocks Based On Cash Flows In India
Name | Current Price | Fair Value (Est) | Discount (Est) |
HEG (NSEI:HEG) | ₹2084.15 | ₹3283.63 | 36.5% |
IOL Chemicals and Pharmaceuticals (BSE:524164) | ₹412.45 | ₹636.71 | 35.2% |
Updater Services (NSEI:UDS) | ₹314.10 | ₹539.26 | 41.8% |
Vedanta (NSEI:VEDL) | ₹451.40 | ₹748.67 | 39.7% |
Rajesh Exports (NSEI:RAJESHEXPO) | ₹309.95 | ₹506.28 | 38.8% |
Strides Pharma Science (NSEI:STAR) | ₹935.00 | ₹1664.05 | 43.8% |
Mahindra Logistics (NSEI:MAHLOG) | ₹523.65 | ₹901.85 | 41.9% |
Delhivery (NSEI:DELHIVERY) | ₹382.05 | ₹738.99 | 48.3% |
PVR INOX (NSEI:PVRINOX) | ₹1412.20 | ₹2539.84 | 44.4% |
Godrej Properties (NSEI:GODREJPROP) | ₹3362.65 | ₹5576.49 | 39.7% |
Let's dive into some prime choices out of from the screener.
Godrej Properties
Overview: Godrej Properties Limited operates in real estate construction and development across India, with a market capitalization of approximately ₹935.01 billion.
Operations: The company generates revenue primarily from real estate development, amounting to ₹29.95 billion, and a smaller segment in hospitality, which contributes ₹0.41 billion.
Estimated Discount To Fair Value: 39.7%
Godrej Properties, trading at ₹3362.65, significantly below its fair value of ₹5576.49, shows potential as an undervalued stock based on cash flows. Despite challenges in debt coverage by operating cash flow, the company has demonstrated robust earnings growth at 35.76% per year and revenue growth forecasted at 31.6% annually, outpacing the Indian market significantly. Recent acquisitions in Bengaluru and Pune with substantial revenue potentials (INR 12 billion and INR 18 billion respectively) underscore aggressive expansion and promising future income streams.
Strides Pharma Science
Overview: Strides Pharma Science Limited, operating globally including in Africa, Australia, North America, Europe, Asia, and India, focuses on developing, manufacturing, and selling pharmaceutical products with a market capitalization of approximately ₹85.94 billion.
Operations: The pharmaceutical business, excluding the bio-pharmaceutical segment, generates revenue of approximately ₹40.51 billion.
Estimated Discount To Fair Value: 43.8%
Strides Pharma Science, priced at ₹935, is identified as highly undervalued with a fair value of ₹1664.05, reflecting a 43.8% undervaluation. Despite a modest dividend coverage and anticipated low return on equity at 16.2%, the company is expected to transition to profitability within three years, supported by revenue growth projections of 11.2% annually—surpassing the Indian market's average of 9.6%. Recent management shifts aim to enhance governance and financial strategies, potentially strengthening future cash flows and operational efficiency.
Vedanta
Overview: Vedanta Limited is a diversified natural resources company that engages in the exploration, extraction, and processing of minerals and oil and gas across India, Europe, China, the United States, Mexico, and other global markets with a market capitalization of approximately ₹1.67 trillion.
Operations: The company's revenue is primarily derived from Aluminium (₹48.37 billion), Zinc - India (₹27.93 billion), Copper (₹19.73 billion), Oil and Gas (₹17.84 billion), Iron Ore (₅9.07 billion), and Zinc - International (₹3.56 billion).
Estimated Discount To Fair Value: 39.7%
Vedanta Limited, trading at ₹451.4, is significantly below the estimated fair value of ₹748.67, marking a substantial undervaluation based on cash flows. Despite challenges like high debt levels and lower-than-market forecasted revenue growth at 6.6% annually compared to the market's 9.6%, Vedanta shows strong potential with earnings expected to grow by 43.25% per year and a very high forecast return on equity of 51.1% in three years. Recent strategic moves include a ₹60 billion private placement and interest in acquiring Sinnar Thermal Power, enhancing its financial and operational scope.
The analysis detailed in our Vedanta growth report hints at robust future financial performance.
Take a closer look at Vedanta's balance sheet health here in our report.
Summing It All Up
Gain an insight into the universe of 20 Undervalued Indian Stocks Based On Cash Flows by clicking here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NSEI:GODREJPROP NSEI:STAR and NSEI:VEDL.
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