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Over the last seven days, the Indian market has remained flat; however, over the past 12 months, it has experienced a significant rise of 40%, with earnings expected to grow by 17% per annum in the coming years. In this context of growth and stability, identifying stocks that may be trading below their estimated value can offer investors potential opportunities for capitalizing on undervalued assets.
Top 10 Undervalued Stocks Based On Cash Flows In India
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| HEG (NSEI:HEG) | ₹514.08 | ₹964.62 | 46.7% |
| Titagarh Rail Systems (NSEI:TITAGARH) | ₹1170.05 | ₹2144.40 | 45.4% |
| RITES (NSEI:RITES) | ₹308.65 | ₹516.72 | 40.3% |
| Vedanta (NSEI:VEDL) | ₹472.15 | ₹899.37 | 47.5% |
| Patel Engineering (BSE:531120) | ₹56.69 | ₹92.23 | 38.5% |
| Orchid Pharma (NSEI:ORCHPHARMA) | ₹1335.60 | ₹2142.32 | 37.7% |
| Artemis Medicare Services (NSEI:ARTEMISMED) | ₹279.40 | ₹445.15 | 37.2% |
| Tarsons Products (NSEI:TARSONS) | ₹411.25 | ₹706.88 | 41.8% |
| Manorama Industries (BSE:541974) | ₹891.10 | ₹1665.51 | 46.5% |
| Strides Pharma Science (NSEI:STAR) | ₹1643.30 | ₹2704.30 | 39.2% |
We're going to check out a few of the best picks from our screener tool.
Prataap Snacks
Overview: Prataap Snacks Limited manufactures and sells packaged snacks in India and internationally, with a market cap of ₹27.74 billion.
Operations: The company generates revenue of ₹16.52 billion from its snacks food segment.
Estimated Discount To Fair Value: 23%
Prataap Snacks is trading 23% below its estimated fair value of ₹1509.79, suggesting it may be undervalued based on cash flows. Despite a recent decline in net income to ₹94.39 million for Q1 2024, earnings are forecast to grow significantly at 24.5% annually over the next three years, outpacing the Indian market's expected growth. However, significant insider selling and a low projected return on equity of 9.3% could be concerns for investors.
Strides Pharma Science
Overview: Strides Pharma Science Limited develops, manufactures, and sells pharmaceutical products across various international markets, with a market cap of ₹151.11 billion.
Operations: The company's primary revenue segment is its pharmaceutical business, excluding bio-pharmaceuticals, which generated ₹42.09 billion.
Estimated Discount To Fair Value: 39.2%
Strides Pharma Science is trading 39.2% below its estimated fair value of ₹2,704.3, indicating potential undervaluation based on cash flows. Recent financial results show a turnaround with net income reaching ₹702.02 million in Q1 2024 after a prior loss, and revenue growth outpacing the Indian market at 11.4% annually. The company has also reduced its debt significantly by redeeming non-convertible debentures worth ₹1 billion recently, enhancing its financial stability.