The Indian stock market has experienced a notable fluctuation recently, declining by 2.0% over the last week but rising by 43% over the past year with earnings expected to grow by 16% annually. In this context, identifying undervalued stocks that offer significant discounts can be particularly compelling for investors looking for potential opportunities in a growing market.
Top 10 Undervalued Stocks Based On Cash Flows In India
Overview: Piramal Pharma Limited is a global pharmaceutical company with operations across North America, Europe, Japan, and India, boasting a market capitalization of approximately ₹220.80 billion.
Operations: The company generates revenue primarily from its pharmaceutical segment, which reported earnings of ₹81.71 billion.
Estimated Discount To Fair Value: 30.8%
Piramal Pharma, trading at ₹166.55, is considered undervalued based on discounted cash flow with a fair value estimate of ₹240.54. Despite recent regulatory challenges, including fines totaling INR 68 million for excise and GST violations from historical operations, the company's financial health appears robust. It reported a significant turnaround with net income reaching INR 178.2 million in FY2024 from a loss the previous year, alongside revenue growth outpacing the Indian market average. Earnings are expected to grow by 67.1% annually, suggesting potential underappreciation by the market.
Overview: Rajesh Exports Limited operates in India as a gold refiner and engages in the manufacturing, wholesaling, and retailing of gold and diamond jewelry, along with various other gold products, with a market capitalization of approximately ₹93.94 billion.
Operations: The company generates revenue primarily from gold products, totaling approximately ₹28.09 billion.
Estimated Discount To Fair Value: 37.3%
Rajesh Exports, priced at ₹318.15, is deemed undervalued with a fair value of ₹507.63, reflecting a 37.3% discount. The company's earnings are expected to grow by 31.7% annually, outpacing the Indian market forecast of 16%. Despite this growth potential and favorable valuation compared to its peers, its profit margins have declined from last year's 0.4% to a current 0.1%, indicating some operational challenges ahead.
Overview: Strides Pharma Science Limited is a pharmaceutical company that develops, manufactures, and sells products across continents including Africa, Australia, North America, Europe, Asia, and India with a market capitalization of approximately ₹92.19 billion.
Operations: The company generates revenue primarily from its pharmaceutical business, excluding the bio-pharmaceutical segment, amounting to ₹40.51 billion.
Estimated Discount To Fair Value: 39.7%
Strides Pharma Science, with a current trading price of ₹1003, is significantly undervalued based on DCF analysis, showing a potential discrepancy as it trades 39.7% below the estimated fair value of ₹1664.05. Recent executive shifts aim to enhance leadership in key financial and operational roles, potentially stabilizing future cash flows and governance. Despite low forecasted Return on Equity at 16.2%, revenue growth projections are robust at 11.2% annually, outperforming the Indian market prediction of 9.5%. However, profitability is only expected to turn positive in the next three years, indicating some underlying risks amidst its growth trajectory.
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:PPLPHARMA NSEI:RAJESHEXPO and NSEI:STAR.
