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Top 5 undervalued stocks in India 2024

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Published Date: 04 Apr 2024Updated Date: 17 Dec 20246 mins readBy MOFSL
Undervalued stocks

Many Indian consumers want to pay Rs 10 for a product and enjoy Rs 11 in benefits, as they believe in getting the total worth out of their money. Using this similar analogy, you can learn to pick undervalued stocks in the stock market

If you invested in a stock that has not been noticed by many investors but has the business 

moat to grow massively in the coming years, you will get excellent returns on your investment.

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Most fund managers call these stocks undervalued stocks because they help to generate alpha for their portfolios. Undervalued stocks are shares sold for less than their fundamental worth. This discrepancy in pricing can arise from factors like short-term market fluctuations, specific issues within the company, or just the fact that it's not "discovered" yet.

Spotting undervalued stocks isn't just about finding cheap shares; it's about discovering quality stocks priced below their rightful valuation. Investors who purchase these undervalued shares do so with the expectation that their prices will eventually align with their true worth as the market acknowledges their actual value.

On the other hand, an overvalued stock is one trading at a price exceeding its real market value. These are the stocks you want to avoid buying at all costs.

In this blog, let us look at 5 stocks that are currently undervalued and have the potential to become big in 2024. 

Andhra Paper Ltd

Andhra Paper produces and sells paper, pulp, and paper and cardboard products. The firm specialises in creating writing and printing papers, copiers, and specialty papers for photographs, batteries, charts, and other packaging needs.

With two production plants located in Rajahmundry and Kadiyam, Andhra Paper has a total production capability of 807 tons per day and a warehouse capacity of 6,500 tonnes spread over 450 acres.

The company has successfully decreased its debt levels and is close to achieving a debt-free status. Over the past five years, Andhra Paper has achieved a profit growth, with a CAGR of 42.4% and is most likely to grow further. 

Chennai Petroleum Corporation Ltd

Chennai Petroleum Corporation Limited is in the business of refining crude oil to create and distribute petroleum products. It is also into the production and sales of lubricant oil additives.

This company produces LPG, Motor Spirit, Superior Kerosene, Aviation Turbine Fuel, High-Speed Diesel, Naphtha, Fuel Oil, Lube Base Stocks, and Bitumen. These products are distributed through its parent company, Indian Oil Corporation Limited, which has a number of petrol pumps all over India.

They also produce specialty items such as Paraffin Wax, Mineral Turpentine Oil (MTO), Hexane, Petrochemical feedstocks, linear Alkylbenzene Feedstock (LABFS), Petroleum Coke, and Sulphur, which the company markets directly.

The corporation has reduced its debt and has shown profit growth with a CAGR of 31.1% over the past five years. It also has a 3-year ROE of 64.3%. All these metrics reflect a positive outlook for the company.

Bajaj Finserv Ltd

Bajaj Finserv Ltd. is an umbrella entity for the Bajaj group's financial services. It offers insurance and financing solutions through its subsidiaries: Bajaj Allianz General Insurance Company Limited, Bajaj Allianz Life Insurance Company Limited, and Bajaj Finance Limited. 

The company has a huge clientele and also offers financial solutions like asset acquisition, general and life insurance, retirement and savings plans.

Over the past five years, Bajaj Finserv has achieved profit growth with a CAGR of 19.4% and has maintained a median sales growth rate of 20.0% over the last decade. Financial planning is a booming industry, and the company is likely to show very positive returns in the future. 

Salzer Electronics Ltd

Salzer Electronics Limited is in the business of delivering tailored electrical solutions like switchgear, wires & cables, and energy management sectors. The company is known for its production of CAM CAM-operated rotary switches and wire ducts within India.

Salzer's product lineup features components like cable ducts, switches, connectors, transformers, automatic source changeover with current limiters, distribution boards, industrial wires & cables, and street light controllers.

MSTC Ltd

MSTC Ltd engages in trading, e-commerce, and the disposal of ferrous and non-ferrous scrap, surplus stores, minerals, and agricultural and forest products. They are a government-owned corporation in India.

MSTC serves as an intermediary in the procurement process of raw materials for secondary steel producers and the petrochemical sector. It operates on behalf of purchasers and applies the markup as a percentage of the transaction value. 

The company's profit growth has been a CAGR of 25.6% over the past five years. Its ROE is 30.0%, and it has consistently offered a healthy dividend payout rate of 38.9%.

Conclusion 

Undervalued stocks present an opportunity to buy shares of reputable companies at a discounted rate. However, before you invest your money in these shares you must study the charts and choose a good consolidation point for buying the share. 

You must also conduct thorough research and consider the potential risks before investing in these stocks, which are likely to obtain a true valuation in the future. 

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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