Top Undervalued Stocks in India to Watch Out For in 2022

However, the simplest means to make money in the stock market is to be able to find stocks that are ignored and are priced lower than their actual value, and once this is done, one should simply wait until the stock eventually rallies to harvest your profits. However simple this may sound, finding an undervalued stock takes a lot of time and effort. There are over 7400 companies listed on the NSE, and this is a tedious task for anyone.

Undervalue = Fair Price of stock – Current Price of stock

Top Undervalued Stocks in India to be Watching Out for in 2022:

  • Globus Spirits

It was founded in 1992 and since then it has come a long way in a short period of time, and the company caters to four segments i.e. Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), IMFL Bottling, and Bulk Alcohol, and it is currently has a market cap of Rs. 3,100 cr, although not forming among the top 3 stocks in the Indian alcohol industry, it comes with its own set of positives, and the stock currently trades at a PE ratio of 15.9 which is way below its industry average PE of 26.3, and in addition to this, the stock also has a PEG ratio of 0.25 further showing that it is undervalued, while the company’s debt status further brings more good news with a low debt-equity ratio of 0.23, and the company has the ability to pay its interest multiple times over with an interest coverage ratio of 25.6, whereas the company’s profits and its sales have given a compounded growth of 83% and 17% over the last five years, and the company also maintains a good ROE ratio of 27.6 with a ROCE of 34, while the firm also has good liquidity to meet its immediate needs with a current ratio of 1.51.  

  • Vindhya Telelink

It was founded in 1983 and is a leading manufacturer and supplier of jelly-filled telecommunication cables and optical fibre telecommunication cables. Despite being one of the smallest companies on this list, it still comes with many positives. The stock currently trades at a PE ratio of 6.80, which is way below its industry average PE of 37.2, and it currently has a market cap of Rs. 1313 cr. The company’s debt status further brings more good news with a low debt-equity ratio of 0.18, and the company can pay its interest multiple times over with an interest coverage ratio of 5.54, and its profit growth over the last 3 years beats its sector leader Sterlite Tech. It also has good liquidity to meet its immediate needs with a current ratio of 1.93.

  • UPL Ltd.

It was founded in 1969 and is the largest and top agriculture company in India, whereas the company manufactures and markets crop protection products, intermediates, and specialty chemicals, among other industrial chemicals, while this Indian MNC however is one of the top 5 players in the global agrochemicals industry with its products sold in over around 138 countries, and the company has a market cap of Rs. 56,960 cr, while despite being the market leader the company still finds its way into the undervalued list, and the stock currently trades at a PE ratio of 14.1 which is way below its industry average PE of 25, whereas in addition to this, the stock also has a PEG ratio of 0.85 further showing that it is undervalued, the company maintains a good debt-equity ratio at 1.08 which is still manageable, wherein the company has the ability to pay its interest multiple times over with an Interest coverage ratio of 3.62, the company’s compounded profits and sales growth over the last 3 years have grown at 28% and 28%, and its sales growth for 3 years beats all of its peers in the sector except India Pesticides which has also achieved a sales growth of 28%, while the company also maintains a good ROE ratio of 16.7 with a ROCE of 15.6, and the firm also has good liquidity to meet its immediate needs with a current ratio of 1.38. 

  • JK Lakshmi

If one takes a look at the cement industry, the sector includes many large players who have dominated the industry, and amongst them includes JK Lakshmi Cement, which has also got a well-established cement company, while the company forms part of the JK Organisation group, and the company has a good presence across India barring the south with an annual turnover of over Rs. 4000 crores, while the company has a market cap of Rs. 5,565 cr, whereas the stock currently trades at a PE ratio of 12.1, which is below its industry average PE of 20.9. In addition to this, the stock also has a PEG ratio of 0.19, further showing that it is undervalued, and the company maintains a good debt-equity ratio at 0.75, which is still manageable, while the company can pay its interest multiple times over with an interest coverage ratio of 5.54, while its profit growth over the last 3 years beats all the other top companies in the sector, and in addition to this, its sales growth for 3 years is one of the best in the sector, while the company also maintains a good ROE ratio of 20% with a ROCE of 18.7%, and the firm’s liquidity to meet its immediate needs is slightly low with a current ratio of 0.77.

  • Birla Corporation 

Birla Corporation is yet another gem in the cement sector and is part of one of the largest business houses in the country. Birla Corporation extends its footprint in the cement sector, whereas the company has a market cap of Rs. 7,485 cr., while the stock currently trades at a PE ratio of 21.4, which is slightly above its industry average PE of 20.9, and in addition to this, the stock also has a PEG ratio of 1.06, further showing that it is trading at a fair price, while the company can pay its interest multiple times over with an interest coverage ratio of 2.88, while the company’s ROE, however, is a little disappointing at 7.32 with a ROCE of 8.16, and the firm also has good liquidity to meet its immediate needs with a current ratio of 1.34.

Conclusion

These are some stocks that one would feel have a lot of untapped potential in them, but an investor must also perform analysis and also look into the company’s plans before making any investments.

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