The Indian stock market has shown robust growth, rising by 2.3% in the last week and an impressive 45% over the past year, with earnings expected to grow by 16% annually. In this thriving market environment, identifying stocks that are potentially undervalued could offer investors a strategic advantage.
Top 10 Undervalued Stocks Based On Cash Flows In India
Overview: Delhivery Limited offers supply chain solutions to a diverse range of industries including e-commerce, FMCG, and automotive in India, with a market capitalization of approximately ₹304.85 billion.
Operations: The revenue from logistics services for the company amounts to ₹81.42 billion.
Estimated Discount To Fair Value: 45.1%
Delhivery, currently valued at ₹412.4, is trading significantly below its fair value estimate of ₹751.11, indicating a potential undervaluation of over 45%. Despite a challenging market, Delhivery has demonstrated robust earnings growth at an annual rate of 16.5% over the past five years and is expected to turn profitable within the next three years with forecasted profit growth outpacing the market. However, its revenue growth projection of 14.3% annually lags behind more aggressive market averages but still exceeds general Indian market expectations. Recent strategic executive appointments and expansions into new business areas like drone logistics suggest operational enhancements that might support future financial performance despite current forecasts showing a low return on equity in three years' time.
Overview: Piramal Pharma Limited is a global pharmaceutical company with operations across North America, Europe, Japan, and India, boasting a market capitalization of approximately ₹225.75 billion.
Operations: The company generates ₹83.73 billion in revenue from its pharmaceutical segment.
Estimated Discount To Fair Value: 14.8%
Piramal Pharma, priced at ₹170.28, is undervalued by approximately 14.8% against a fair value of ₹199.96, reflecting potential investment appeal based on cash flows. The company's revenue and earnings growth forecasts are robust, outstripping the broader Indian market with expected annual increases of 12.2% and 73%, respectively. However, challenges include a recent net loss and regulatory penalties that may impact short-term performance but are not expected to materially affect long-term operations.
Overview: Texmaco Rail & Engineering Limited is an engineering and infrastructure company based in India, operating both domestically and internationally, with a market capitalization of approximately ₹112.53 billion.
Operations: The company's revenue is generated primarily from three segments: the Freight Car Division contributes ₹27.50 billion, while the Infra - Electrical and Infra - Rail & Green Energy segments add ₹2.26 billion and ₹5.27 billion, respectively.
Estimated Discount To Fair Value: 14.3%
Texmaco Rail & Engineering, currently priced at ₹281.71, is positioned below its estimated fair value of ₹328.65, suggesting a potential undervaluation based on cash flows. The company's revenue growth forecast at 14.2% annually is robust, though not exceeding 20%, and its earnings are expected to rise by 28.9% per year, surpassing the Indian market's average of 15.7%. However, recent shareholder dilution and a highly volatile share price may pose risks to investors despite these positive growth indicators and a recent dividend increase announcement on May 16, 2024.
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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:DELHIVERY NSEI:PPLPHARMA and NSEI:TEXRAIL.
