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	₹323.40	HOLD	LARGE CAP	411.81	-34.48%	-26.52%	-6.53%	53.52%	11.64	21.98	7.55	0.52	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	405195.28	27.91%	36.71%	28.01	11950089
Asian Paints Ltd	₹2,703.70	HOLD	LARGE CAP	2808.89	10.83%	20.08%	-0.7%	10.96%	66.53	58.87	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	259338.31	19.24%	25.04%	38.68	1786635
Sun Pharmaceutical Industries Ltd	₹1,631.90	BUY	LARGE CAP	1965.29	-18.94%	-8.67%	56.4%	186.4%	37.43	40.46	17.11	0.76	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	391547.47	17.83%	16.29%	45.76	1678658
Avenue Supermarts Ltd	₹3,665.60	HOLD	LARGE CAP	4141.33	-6.07%	3.75%	2.9%	30.37%	83.25		11.94	0.77	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	238532.71	14.1%	18.47%	41.61	185668
Coal India Ltd	₹418.40	BUY	LARGE CAP	408.3	0.51%	11.35%	88.13%	223.96%	8.26	17.46	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	257848.55	96.15%	70.32%	57.28	6520896
Varun Beverages Ltd	₹474.10	BUY	LARGE CAP	597.81	-20.21%	-9.73%	90.78%	492.25%	53.94	58.22	13.04	1.04	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	160340.09	19.64%	22.98%	7.79	3352354
Eicher Motors Ltd	₹6,973.00	HOLD	LARGE CAP	7266.69	28.35%	35.54%	119.99%	149.94%	37.43	39.09	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	191268.86	25.03%	30.32%	172.66	365996
Bharat Electronics Ltd	₹410.70	BUY	LARGE CAP	463.81	41.97%	56.19%	335.52%	828.56%	52.72	53.71	11.18	1.05	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	300212.62	29.56%	37.49%	7.23	12715222
ABB India Ltd	₹4,694.50	HOLD	LARGE CAP	5275.54	-33.78%	-22.83%	67.47%	238.03%	56.39	56.75	20.71	1.17	NA	409.04 Cr	16.29%	-23.7%		3285.33	4.48%	2.13%		1.85%	11.31%	-25.29%		Industrials	99480.39	28.75%	38.43%	5.52560526008916	114255
Dr Reddys Laboratories Ltd	₹1,235.60	HOLD	LARGE CAP	1308.98	-12.12%	3.17%	43.21%	25.84%	18.48	40.46	3.31	0.84	0.7%	1189.6 Cr	-11.01%	2.64%	162.32%	8727	-0.88%	16.54%	51.51%	17.54%	-10.22%	-11.93%	73.14%	Basic Materials	103126.93	20.15%	25.47%	68.65	3888860

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	₹132.96	BUY	LARGE CAP	186	19.46%	33.79%	168.12%	1240.32%	21.75	26.62	4.74	1.25	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	256409.3	26.75%	21.83%	6.612	52434571
Tata Motors Passenger Vehicles Ltd	₹344.45	HOLD	LARGE CAP	371.68	-32.33%	-51.69%	-22.7%	28.77%	18.17	39.09	7.42	1.4	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	126837.9	17.15%	18.21%	46.3048163304841	8354700
AWL Agri Business Ltd	₹209.06	BUY	SMALL CAP	309.17	-27.98%	-19.96%	-59.55%	-22.07%	25.01	58.22	3.57	0.67	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	27171.08	13.78%	20.03%	8.98	997078
Infosys Ltd	₹1,670.80	BUY	LARGE CAP	1820.45	-18.38%	-8.3%	9.98%	28.42%	24.71	31.45	7.47	1.22	6666 Cr	-9.61%	1.91%	20.79%	45479	2.22%	6.06%	33.99%	16.41%	-11.58%	-3.91%	-9.85%	Technology	677455.07	30.35%	39.64%	64.52	5869137
Tata Steel Ltd	₹187.61	BUY	LARGE CAP	192.42	35.96%	48.46%	55.5%	199.7%	34.36	27.44	1.21	1.45	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	234203.45	9%	10.52%	2.54	28492706
Yes Bank Ltd	₹20.92	SELL	MID CAP	20.27	5.32%	13.14%	19.54%	32.83%	20.71	15.62	1.11	0.99	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	65644.81	4.51%	NA	0.78	120490912
Eternal Ltd	₹258.70	BUY	LARGE CAP	373.13	8.61%	25.46%	451.01%	105.32%	1034.8	-167.54	5.36	1.33	102 Cr	56.92%	50.14%	-143.11%	16315	20.05%	67.1%	382.85%	2.6%	30.71%	-10.15%	-108.93%	Technology	249654.57	6.33%	7.08%	0.58	85765429
ITC Ltd	₹323.40	HOLD	LARGE CAP	411.81	-34.48%	-26.52%	-6.53%	53.52%	11.64	21.98	7.55	0.52	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	405195.28	27.91%	36.71%	28.01	11950089
Wipro Ltd	₹238.40	HOLD	LARGE CAP	263.37	-32.9%	-22.58%	19.78%	6.8%	18.82	31.45	4.36	1.12	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	250014.81	17.89%	21.54%	12.62	13546802
HDFC Bank Ltd	₹916.10	BUY	LARGE CAP	1157.44	2.11%	12.42%	13.39%	29.98%	18.86	15.62	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	1409590.74	14.3%	NA	47.985	30985247

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.