Best stocks below Rs 20 in India 2022: Detailed Analysis
Investors usually look for low risk and financially stable investment options when dealing with the share market investments. Nevertheless, you can also invest in undervalued stocks that are available under rupees 20 and can provide you with a huge return on investments.
The return on investment from a small company’s undervalued stocks is even better than large-cap and mid-cap investment returns that you receive from the stock market. Investing in undervalued but quality stocks is known as value investing. In this article, we will get to know more about value investing and how you can invest in the best low price shares.
About Value Investing in low price shares
Value investing is a specific kind of investment strategy that focuses on the intrinsic value of a stock. According to this investment strategy, every company stock has its own intrinsic or original value, and if a company share is available at a very low price while it also has the potential to grow further in the future, as a value investor you can become a shareholder of the company and utilize the opportunity to increase your return on investment.
As an investor, you should focus on quality company stocks that have the opportunity to grow further with time. The British-born investor Benjamin Graham is the pioneer of value investment strategy. Using the same investment philosophy his most celebrated student, Warren Buffet became the richest investor in the world.
According to Benjamin Graham, if an investment is not based upon thorough research and analysis, then it is purely speculative. Whereas, value investing is entirely dependent upon the fundamental analysis of the company.
Things You Must Know About Investing in Price Shares
When you have decided to take the value investing approach, you should begin searching for stocks that have extremely less value in comparison to their congenital value. Whichever company you choose, it must have the ability to grow and develop so that you can expect its shares to rise significantly over time in order to fulfill the shares’ inherent value.
Steps that ensure how value investing works:
- Firstly, investors must conduct in-depth research and analysis to choose a list of undervalued shares in the stock market.
- Secondly, the investor now must streamline the stocks they can buy and then follow it up with purchasing those at slashed prices.
- After purchasing the undervalued stocks from the market, the investor must show diligent patience in holding the shares until they have reached their potential amounting to handsome returns for the investor.
The prime focus of the value investment strategy is to scoop out undervalued stocks from the current market and maximize gains over time by holding them patiently. The investor should remember that every stock has an inherent value that can be deducted only using fundamental analysis.
The investor must understand the key element here is a detailed analysis of the shares in the market to ensure they have purchased the best undervalued stocks at discounted rates. Other than securing lofty profits, the investor will also have a margin of safety in the value investment technique.
Factors to check before buying best stocks below Rs 20
Every investor is advised to thoroughly evaluate the companies before deciding to invest in them or signing up to buy their stocks. Besides the above, the investor should look out for multiple factors like the financial strength of the company, its products, and services, the long-term goals of the company, its capital structure, the business fundamentals, and so on.
These factors outline numerous perceptions that help the investor decide whether the stock is good for long-term profits or not. Additionally, the investors should also inquire whether the company they want to buy undervalued stocks from is paying regular dividends to the shareholders or not.
Other metrics the investor must pursue are to know the stock’s intrinsic value through the company’s annual revenue, cash flow, fiscal performance, brand value, revenue model, market responses, and profits. This gives the investor an insight into why the stocks are so underrated in the market.
In addition, these are the most vital factors that can help the value investor determine the final decision of investing in the company:
The P/B ratio is better understood as the correlation between a particular company’s book value and the current share price of each of its stock. The company’s book value is the sum total of its assets when divided by the number of shares that have been released in the market. The price-to-book ratio helps investors evaluate the entire financial position of the company and conclude whether it is able to generate profits in the future. Price to earnings ratio formula: PB Ratio= Share Price/ Book-value per share. (Book value per share is Assets minus liabilities divided by number of outstanding shares)
The price-to-earnings ratio or P/E ratio is the correlation between a particular company’s actual share price to the capital it has raised by distributing its equity shares to investors and shareholders. The P/E ratio enables value investors to evaluate the current performances of the stocks to see if it can turn into a profitable decision to invest in them. PE Ratio= Share Price/ Earnings per share.
List of Best stocks below Rs 20 in India 2022 based on M-cap
|Name||Market Cap (Cr.)||P/E Ratio||Close Price (Rs.)|
|Yes Bank Ltd||42,470||38.29||16.85|
|Indian Overseas Bank||38,277||20.09||21.35|
|Indian Railway Finance Corp Ltd||36,461||5.65||27.55|
|Central Bank of India Ltd||19,836||14.86||23.50|
|Bank of Maharashtra Ltd||15,547||9.45||25.10|
|Infibeam Avenues Ltd||4,356||37.04||17.05|
|Hathway Cable and Datacom Ltd||2,788||24.46||15.70|
(Data as of 18 November 2022)
Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns
Important things to remember:
1. Do Not Blindly Follow Hot Tips
No matter how credible the source is, never follow a stock marketing tip blindly without conducting thorough research personally. Always select the stocks after doing proper research and analysis on the performance as well as the companies. While some tips can work out to give you huge benefits, the wrong ones can push you down under the risk pretty quickly.
2. Eliminate Loser Stocks from Portfolio
There is absolutely no guarantee that a stock will rise after a great fall. Know that it is extremely important to be practical about what is possible and what's impossible in the stock market. So, upon realizing that a stock is performing poorly in your portfolio, accept your mistake and sell it immediately to prevent further losses.
3. Don't Exceed Your Investment Budget Abruptly
While it's true that long-term investments are way better than other forms of investment, you shouldn't exceed your investment budget in a haste. Instead, decide on a fixed amount and invest it across various good stocks. Rather than investing in only one stock, divide your budget evenly across multiple good-performing stocks and shares.
Which shares to buy below Rs 50?
Find out the best stocks to buy under Rs 50 in 2022 for long term investment from the table below:
Name Market Cap (Cr.) P/E Ratio 5Y CAGR (%) Close Price (Rs.) Rattanindia Enterprises Ltd Rs. 5,888.47 10.63 61.73 42.60 Brightcom Group Ltd Rs. 6,596.57 7.23 54.66 33.10 Alok Industries Ltd Rs. 10,054.73 -48.20 49.63 20.25 Trident Ltd Rs. 19,018.07 22.81 37.40 38.00 Shree Renuka Sugars Ltd Rs. 10,089.04 -72.85 30.65 47.40 Rail Vikas Nigam Ltd Rs. 6,348.89 5.37 22.36 30.45 GMR Infrastructure Ltd 21,065.45 -20.59 12.64 34.90 TV18 Broadcast Ltd Rs. 6,488.85 11.10 0.98 37.85 MMTC Ltd Rs. 5,872.50 -7.44 0.92 39.15 NHPC Ltd 32,445.46 9.21 0.16 32.30
(Price date as per June 28, 2022)
Which share to buy today below Rs 100?
Find out the best multibagger stocks below 100 Rs. for long term investment from the table below:
Name Market Cap (Cr.) P/E Ratio 5Y CAGR (%) Close Price (Rs.) Rattanindia Enterprises Ltd Rs. 5,812.44 10.49 61.73 42.60 Brightcom Group Ltd Rs. 6,935.37 7.60 54.66 33.10 Alok Industries Ltd Rs. 9,955.43 -47.72 49.63 20.25 Trident Ltd Rs. 18,642.72 22.36 37.40 38.00 HFCL Ltd Rs. 7,743.00 24.88 36.01 56.55 Shree Renuka Sugars Ltd Rs. 10,269.96 -72.85 30.65 47.40 Rail Vikas Nigam Ltd Rs. 6,296.76 5.37 22.36 30.45 Fertilisers And Chemicals Travancore Ltd. Rs. 6,244.24 18.02 19.05 98.40 Hindustan Copper Ltd Rs. 8,243.88 22.05 6.85 87.25 Jindal Stainless Ltd Rs. 5,191.90 2.79 7.10 99.90
(Price date as of June 27, 2022)