HEG And 2 Other Stocks On The Indian Exchange That May Be Undervalued
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Over the last 7 days, the Indian market has dropped 4.0%, driven by declines in every sector, yet it remains up 40% over the past year with earnings forecast to grow by 17% annually. In such a fluctuating environment, identifying undervalued stocks like HEG and others can offer potential opportunities for investors looking to capitalize on market inefficiencies.
Top 10 Undervalued Stocks Based On Cash Flows In India
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| HEG (NSEI:HEG) | ₹1991.40 | ₹3903.67 | 49% |
| Shyam Metalics and Energy (NSEI:SHYAMMETL) | ₹696.65 | ₹1127.46 | 38.2% |
| NIIT Learning Systems (NSEI:NIITMTS) | ₹460.90 | ₹709.76 | 35.1% |
| S Chand (NSEI:SCHAND) | ₹223.33 | ₹357.19 | 37.5% |
| Titagarh Rail Systems (NSEI:TITAGARH) | ₹1379.20 | ₹2172.65 | 36.5% |
| Kalpataru Projects International (NSEI:KPIL) | ₹1204.75 | ₹1856.06 | 35.1% |
| Prataap Snacks (NSEI:DIAMONDYD) | ₹872.95 | ₹1509.79 | 42.2% |
| Texmaco Rail & Engineering (NSEI:TEXRAIL) | ₹239.05 | ₹397.31 | 39.8% |
| Piramal Pharma (NSEI:PPLPHARMA) | ₹167.73 | ₹289.56 | 42.1% |
| Strides Pharma Science (NSEI:STAR) | ₹1065.40 | ₹2032.10 | 47.6% |
Let's dive into some prime choices out of the screener.
HEG
Overview: HEG Limited manufactures and sells graphite electrodes in India and internationally, with a market cap of ₹76.86 billion.
Operations: HEG Limited's revenue segments include ₹23.61 billion from Graphite (Including Other Carbon Products) and ₹338.34 million from Power.
Estimated Discount To Fair Value: 49%
HEG is trading at ₹1991.4, significantly below its estimated fair value of ₹3903.67, indicating it may be undervalued based on cash flows. Despite a decline in profit margins from 21.6% to 13%, HEG's earnings are forecast to grow at 42.58% annually, outpacing the Indian market's growth rate of 16.7%. Revenue is also expected to rise by 22.3% per year, surpassing the market average of 9.8%.
PVR INOX
Overview: PVR INOX Limited is a theatrical exhibition company involved in the exhibition, distribution, and production of movies in India and Sri Lanka with a market cap of ₹137.97 billion.
Operations: The company's revenue segments include Movie Exhibition, generating ₹59.48 billion.
Estimated Discount To Fair Value: 14.1%
PVR INOX is trading at ₹1406.1, slightly below its estimated fair value of ₹1636.76, suggesting it may be undervalued based on cash flows. Despite recent earnings showing a net loss of ₹1.79 billion for Q1 2024, the company is expanding aggressively with new multiplexes in Ahmedabad and Hyderabad, enhancing its revenue potential. Analysts forecast a 12.3% annual revenue growth and expect the company to become profitable within three years, outpacing market averages.