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Undervalued energy companies, such as Chennai Petroleum and Mangalore Refinery and Petrochemicals, trade at a price less than their true values. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Chennai Petroleum Corporation Limited (BSE:500110)
Chennai Petroleum Corporation Limited produces and sells petroleum and specialty products in India. Formed in 1965, and currently headed by CEO S. Pandey, the company provides employment to 1,641 people and with the market cap of INR ₹42.00B, it falls under the large-cap stocks category.
500110’s stock is currently hovering at around -33% below its intrinsic level of INR419.44, at the market price of ₹282.05, based on its expected future cash flows. signalling an opportunity to buy the stock at a low price. What’s even more appeal is that 500110’s PE ratio stands at 4.53x compared to its Oil and Gas peer level of, 18x suggesting that relative to its comparable company group, we can invest in 500110 at a lower price. 500110 is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 72.28% has been diminishing over the past couple of years revealing 500110’s capacity to pay down its debt. Continue research on Chennai Petroleum here.
Mangalore Refinery and Petrochemicals Limited (BSE:500109)
Mangalore Refinery and Petrochemicals Limited manufactures and sells refined petroleum products in India. Started in 1988, and now led by CEO H. Kumar, the company size now stands at 1,715 people and with the stock’s market cap sitting at INR ₹175.08B, it comes under the large-cap group.
500109’s stock is now trading at -38% lower than its intrinsic level of INR160.75, at a price tag of ₹99.90, based on my discounted cash flow model. This discrepancy gives us a chance to invest in 500109 at a discount. In terms of relative valuation, 500109’s PE ratio stands at 5.04x against its its Oil and Gas peer level of, 18x indicating that relative to other stocks in the industry, 500109’s shares can be purchased for a lower price. 500109 is also in great financial shape, as current assets can cover liabilities in the near term and over the long run.
Continue research on Mangalore Refinery and Petrochemicals here.
Oil and Natural Gas Corporation Limited (NSEI:ONGC)
Oil and Natural Gas Corporation Limited explores for, develops, and produces crude oil and natural gas in India and internationally. Formed in 1993, and now run by Shashi Shanker, the company provides employment to 32,909 people and with the company’s market capitalisation at INR ₹2.38T, we can put it in the large-cap stocks category.