Investors are always looking for stocks that are worth more than they cost right now. These are called undervalued stocks. These stocks, often overlooked due to various factors, offer substantial potential for growth. In this article, we will delve into some of the most undervalued stocks in India for 2024.
Understanding undervalued stocks
Undervalued stocks have a market price much lower than their true worth. This can happen because of negative market sentiment, little analyst attention, company management problems, or industry issues.
Factors affecting undervaluation
Several factors can contribute to the undervaluation of stocks:
- Market Sentiment: Negative market sentiment or short-term fluctuations can lead to a decline in a stock’s price, even when its fundamentals remain strong.
- Lack of Analyst Coverage: Undervalued companies may receive less attention from analysts, limiting their visibility and potential investor interest.
- Corporate Governance Concerns: Issues related to corporate governance, such as fraud or mismanagement, can negatively impact a stock’s valuation.
- Sector-Specific Challenges: Economic downturns, regulatory changes, or industry-specific problems can affect a company’s stock price.
Key considerations for investors
If you are searching for how to find undervalued stock, consider the following factors:
- Fundamental Analysis: This involves assessing a company’s financial health, including its revenue growth, profitability, and debt levels.
- Business Model: Understand the company’s business model, competitive advantage, and long-term growth prospects.
- Management Quality: Evaluate the competence and integrity of the company’s management team.
- Valuation Metrics: Compare the stock’s valuation to its historical averages and industry peers using metrics like the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, and the price-to-sales (P/S) ratio.
- Risk Tolerance: Consider your risk tolerance before investing in undervalued stocks, as they may be more volatile than established companies.
List of undervalued stocks 2024:
- Maha Rashtra APX
- Athena Global
- Key Corp
- 21st cent management
- Vipul limited
- Auto riders International
- Dhoot Industrial Finance Ltd.
- Kiduja India
- Available Finance
- HB stock holdings
The basis of selection is low PE Ratio and is taken from the screener
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Maha Rashtra Apex Corporation Ltd.
Maha Rashtra Apex Corporation Ltd. is a leading non-banking financial company in India. Founded in 1943, it offers various financial services, including hire purchase, leasing, and bill discounting. Known for its long-standing reputation and financial stability, the company has served customers for over eight decades.
| Market Cap (as of 28-09-24) | CMP (As of 28th Sep 24) | All-Time High Level | PE Ratio | Industry PE | 5 yr CAGR Return | Debt to Equity | ROCE(FY24) |
| ₹227 crores | ₹160 | ₹218 | 0.64 | 22.8 | 16% | 0.00 | 120% |
For the quarter ending in June 2024, the company posted revenue of ₹1 crore, the same as in the corresponding period of the previous year. However, it reported a net profit of ₹12 crores, compared to no profit during the same quarter of the prior year. The company is growing rapidly, but while industry PE stands at 22.8, the company PE stands at 0.64. Although the company’s fundamentals are strong, the PE ratio suggests that it is either one of the less-known stocks or that the investors are skeptical about the company. Nonetheless, the stock stands on a point worth researching.
Also Read: Top Solar Energy Stocks for 2024
Athena Global
Athena Global is a leading provider of cloud-based solutions for enterprise risk management (ERM). Their platform offers a comprehensive suite of tools to help organizations identify, assess, and mitigate risks across their operations. With a focus on data-driven insights and automation, Athena Global empowers businesses to make informed decisions and safeguard their future.
| Market Cap | CMP (As of 30th Sep 24) | All-Time High Level | PE Ratio | Industry PE | 5 yr CAGR Return | Debt to Equity | ROCE(FY24) |
| ₹136 Crores | ₹97.2 | ₹136 | 0.66 | 38 | 18% | 0.43 | 124% |
In the quarter ending June 2024, the company posted revenue of ₹4.17 crores, a significant 21% rise from ₹3.37 crores in the same quarter last year. However, the company recorded a loss of ₹4.74 crores for the quarter ending June 24. When compared against the industry PE, the company seems to be severely undervalued, while the stock has been performing well over last 5 years, providing a respectable 18% CAGR in returns, beating Nifty 50 by 0.6%.
Key Corp Ltd.
Key Corp Limited is a non-banking financial company. It is primarily engaged in financing, particularly old vehicle finance and the investment of surplus funds in mutual funds. The Company is focused on various fields, including finance, banking, and industry.
| Market Cap | CMP (As of 30 Sep 24) | All-Time High Level | PE Ratio | Industry PE | 5 yr CAGR Return | Debt to Equity | ROCE(FY24) |
| ₹164 Crore | ₹273 | ₹334 | 1.73 | 22.8 | 90% | 0 | 57.2% |
For the quarter ending June 2024, the company reported a revenue of ₹8.57 crores, reflecting a remarkable 196% increase from ₹0.08 crores in the same period last year. The net profit stood at ₹8.38 crores, representing a solid growth compared to a loss of ₹10 lakhs in the same quarter of the previous year, which can be a reason behind the company’s 90% CAGR over 5 years. It is worth noting that the company has not grown by 90% year on year. Instead, most of it comes from the stock price hike in 2024. Since the stock has been listed it has been moving sideways with the sudden growth in between and can sustain it, making it an interesting stock to check out.
21st-century Management Services
21st Century Management, a leading global management consultancy firm, specializes in helping organizations navigate the complexities of the modern business landscape. They offer various services, including strategic planning, organizational development, leadership coaching, and performance improvement. 21st Century Management empowers businesses to achieve their full potential, focusing on innovation and sustainable growth.
| Market Cap | CMP (As of 30 Sep 24) | All-Time High Level | PE Ratio | Industry PE | 5 yr CAGR Return | Debt to Equity | ROCE(FY24) |
| ₹115 Crores | ₹109 | ₹141 | 1.93 | 23.1 | 53% | 0.00 | 78.4% |
In the quarter ending June 2024, the company recorded a revenue of ₹109 crores, showing a strong 196% increase from ₹1 crore in the same period last year. The net profit reached ₹24 crores, marking a solid growth as the company registered a loss of ₹3 crores in the corresponding quarter of the previous year. The stock has worthy fundamentals, but the PE ratio suggests that investors are still skeptical about the stock compared to its peers. Like Key Corp, most of the momentum in this stock has happened this fiscal year. Historically, the stock has seen many growth spikes but has never sustained the growth.
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Vipul limited
Vipul Limited is a prominent Indian real estate development company known for its high-quality residential and commercial projects. With a strong focus on innovation and customer satisfaction, Vipul Limited has established itself as a trusted name in the industry. Their projects are characterized by modern architecture, premium amenities, and strategic locations, making them attractive to homebuyers and investors.
| Market Cap | CMP (As of 30 Sep 24) | All Time High Level | PE Ratio | 5 yr CAGR Return | ROCE(FY24) |
| ₹495 Crore | ₹35.2 | ₹53 | 1.96 | 2% | 66.1% |
For the quarter ending June 2024, the company reported revenue of ₹15.86 crores, marking a strong 88% rise from ₹6.11 crores in the same period the previous year. Net profit surged to ₹1.81 crores, a notable turnaround from the ₹15.31 crores loss recorded during the same quarter last year. Despite these fundamentals, the PE ratio suggests that the stock is highly undervalued compared to the PE of the Industry, which stands at 29.8.
Conclusion
Identifying undervalued stocks in India demands thorough research and analysis. Investors can tap into growth opportunities by concentrating on companies with solid fundamentals, appealing valuations, and favorable market trends. However, seeking professional investment advisory services is crucial to performing proper due diligence and diversifying investments, which helps manage risk effectively.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQ
What is undervalued in stocks?
Undervalued stocks are those priced below their true value, offering potential investment opportunities. Spotting these stocks requires thorough analysis and might result in profitable returns. However, seeking stock advice from a financial expert or performing in-depth research is essential before making investment decisions.
What is overvalued vs undervalued stocks?
Overvalued stocks are priced higher than their true value, often due to market hype or unrealistic expectations, potentially leading to lower future returns. Undervalued stocks, on the other hand, are priced below their intrinsic value, creating opportunities for investment in top high return stocks. Identifying undervalued stocks involves thorough analysis and can offer significant growth potential compared to their overvalued counterparts.
Is it good to buy an undervalued stock?
Buying these stocks at a discounted price may offer
the potential for significant returns as the market eventually recognizes its actual value. However, it’s crucial to conduct thorough research and consider factors like company fundamentals, industry trends, and market sentiment before making investment decisions.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
