The Indian market has seen a remarkable 44% rise over the past 12 months, with the Utilities sector gaining 3.5% even as the overall market remained flat last week. With earnings forecasted to grow by 17% annually, identifying undervalued stocks that could be trading at significant discounts becomes crucial for investors looking to capitalize on potential growth opportunities.
Top 10 Undervalued Stocks Based On Cash Flows In India
Overview: Prataap Snacks Limited manufactures and sells packaged snacks in India and internationally, with a market cap of ₹21.06 billion.
Operations: Prataap Snacks generates revenue primarily from its Snacks Food segment, which amounted to ₹16.52 billion.
Estimated Discount To Fair Value: 41.6%
Prataap Snacks appears undervalued based on its discounted cash flow analysis, trading at ₹881.95 compared to an estimated fair value of ₹1509.79. Despite a recent dip in net income for Q1 2024, the company has demonstrated consistent revenue growth over the past five years and is forecasted to continue growing faster than the Indian market. Earnings are expected to grow significantly at 25.2% annually over the next three years, indicating strong future potential despite current low return on equity forecasts.
Overview: Kalpataru Projects International Limited offers engineering, procurement, and construction (EPC) services across multiple sectors including power transmission and distribution, buildings and factories, water, railways, oil and gas, and urban infrastructure in India and globally with a market cap of ₹215.48 billion.
Operations: The company's revenue segments include ₹194.92 billion from Engineering, Procurement and Construction (EPC) services and ₹2.81 billion from Development Projects.
Estimated Discount To Fair Value: 23.6%
Kalpataru Projects International Limited, trading at ₹1326.45, is significantly undervalued with an estimated fair value of ₹1735.26 based on discounted cash flow analysis. Despite facing regulatory challenges and penalties related to GST issues, the company has secured substantial new orders worth ₹27.74 billion in diverse sectors including Transmission & Distribution and airport extension projects. Earnings are forecasted to grow at 29% annually over the next three years, outpacing the Indian market's growth rate of 17.3%.
Overview: Mahindra Logistics Limited offers integrated logistics and mobility solutions both in India and internationally, with a market cap of ₹36.46 billion.
Operations: Revenue segments include ₹53.04 billion from Supply Chain Management and ₹3.29 billion from Enterprise Mobility Services.
Estimated Discount To Fair Value: 49.9%
Mahindra Logistics Limited, trading at ₹506.1, is undervalued by more than 20% compared to its estimated fair value of ₹1009.21 based on discounted cash flow analysis. Despite recent regulatory penalties related to GST assessments, the company is forecasted to achieve profitability within three years with earnings expected to grow at 64.29% annually. However, interest payments are not well covered by earnings and its dividend yield of 0.49% is unsustainable under current conditions.
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:DIAMONDYD NSEI:KPIL and NSEI:MAHLOG.
