Yahoo Finance July 2024 Insights Into Stocks On Indian Exchange That May Be Underpriced
The Indian stock market has experienced a significant upswing over the past year, with a 43% increase, despite a recent 1.3% drop in the last seven days. In this context of promising annual earnings growth forecasted at 16%, identifying stocks that may be undervalued could present valuable opportunities for investors looking to capitalize on current market conditions.
Top 10 Undervalued Stocks Based On Cash Flows In India
Name | Current Price | Fair Value (Est) | Discount (Est) |
HEG (NSEI:HEG) | ₹2053.00 | ₹3293.23 | 37.7% |
IOL Chemicals and Pharmaceuticals (BSE:524164) | ₹402.60 | ₹636.71 | 36.8% |
Updater Services (NSEI:UDS) | ₹311.95 | ₹538.27 | 42% |
Vedanta (NSEI:VEDL) | ₹448.75 | ₹720.61 | 37.7% |
Rajesh Exports (NSEI:RAJESHEXPO) | ₹297.65 | ₹506.55 | 41.2% |
Mahindra Logistics (NSEI:MAHLOG) | ₹526.50 | ₹904.01 | 41.8% |
Strides Pharma Science (NSEI:STAR) | ₹951.35 | ₹1664.05 | 42.8% |
Delhivery (NSEI:DELHIVERY) | ₹378.30 | ₹740.39 | 48.9% |
Godrej Properties (NSEI:GODREJPROP) | ₹3242.10 | ₹5591.61 | 42% |
PVR INOX (NSEI:PVRINOX) | ₹1429.65 | ₹2551.28 | 44% |
Let's take a closer look at a couple of our picks from the screened companies.
HEG
Overview: HEG Limited is a company that specializes in manufacturing and selling graphite electrodes both domestically in India and internationally, with a market capitalization of approximately ₹79.24 billion.
Operations: The company generates revenue primarily through the sale of graphite and other carbon products, amounting to ₹23.61 billion, and from its power segment, which contributes ₹0.34 billion.
Estimated Discount To Fair Value: 37.7%
HEG Limited, priced at ₹2053, is trading significantly below its estimated fair value of ₹3293.23, indicating strong undervaluation based on discounted cash flows. Despite a decline in profit margins from 21.6% to 13% over the past year and an unstable dividend track record, HEG's revenue and earnings growth are robust. Revenue is expected to grow by 22.3% annually, outpacing the Indian market's 9.4%, with earnings projected to increase by 42.58% per year, also well above market averages.
Vedanta
Overview: Vedanta Limited is a diversified natural resources company involved in the exploration, extraction, and processing of minerals and oil and gas, operating across India, Europe, China, the United States, Mexico, and other international locations with a market capitalization of approximately ₹1.75 trillion.
Operations: The company's revenue is primarily generated from Aluminium (₹48.37 billion), Zinc - India (₹27.93 billion), Copper (₹19.73 billion), Oil and Gas (₹17.84 billion), Power (₹6.15 billion), Iron Ore (₹9.07 billion), and Zinc - International (₹3.56 billion).
Estimated Discount To Fair Value: 37.7%
Vedanta Limited, trading at ₹448.75, is considered undervalued based on its discounted cash flow valuation of ₹720.61, reflecting a potential underpricing of 37.7%. Despite this, the company faces challenges with a high debt level and lower profit margins year-over-year—3% compared to last year's 7.2%. Recent strategic movements include a substantial INR 85 billion equity offering and active participation in acquiring distressed power assets, signaling growth intentions but also adding complexity to its financial landscape amidst regulatory challenges.
Insights from our recent growth report point to a promising forecast for Vedanta's business outlook.
Delve into the full analysis health report here for a deeper understanding of Vedanta.
VRL Logistics
Overview: VRL Logistics Limited is a logistics and transport company in India with a market capitalization of approximately ₹49.01 billion.
Operations: The company generates its revenue primarily through goods transport, amounting to approximately ₹29.02 billion.
Estimated Discount To Fair Value: 20.9%
VRL Logistics, with a current trading price of ₹560.35, appears undervalued against a fair value estimate of ₹708.04, marking significant potential upside. Despite recent earnings showing a decline—net income dropped to INR 888.51 million from INR 3,232.01 million year-over-year—the company's revenue growth is expected to outpace the Indian market at 12.1% annually compared to 9.4%. However, profit margins have decreased to 3.1% from last year's 6.3%, reflecting some operational challenges amidst its growth trajectory.
Click to explore a detailed breakdown of our findings in VRL Logistics' balance sheet health report.
Summing It All Up
Dive into all 19 of the Undervalued Indian Stocks Based On Cash Flows we have identified here.
Are any of these part of your asset mix? Tap into the analytical power of Simply Wall St's portfolio to get a 360-degree view on how they're shaping up.
Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent.
Interested In Other Possibilities?
Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
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:HEG NSEI:VEDL and NSEI:VRLLOG.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
