A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for Pioneer Investcorp and PNB Gilts. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Pioneer Investcorp Limited (BSE:507864)
Pioneer Investcorp Limited provides investment banking and financial advisory services worldwide. Formed in 1984, and currently lead by Sushant Kumar, the company now has 41 employees and has a market cap of INR ₹462.98M, putting it in the small-cap stocks category.
507864’s shares are now hovering at around -69% beneath its true value of INR120.08, at the market price of ₹37.65, according to my discounted cash flow model. This mismatch signals an opportunity to buy 507864 shares at a discount. Additionally, 507864’s PE ratio stands at around 2.6x while its Capital Markets peer level trades at, 23.53x meaning that relative to its comparable set of companies, we can invest in 507864 at a lower price. 507864 is also strong financially, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 39.97% has been dropping for the last couple of years signalling 507864’s capacity to pay down its debt. More on Pioneer Investcorp here.
PNB Gilts Ltd. (BSE:532366)
PNB Gilts Ltd. operates as a primary dealer in government securities in India. Established in 1996, and currently lead by Shashi Dubey, the company now has 32 employees and with the stock’s market cap sitting at INR ₹6.27B, it comes under the mid-cap group.
532366’s shares are now floating at around -26% lower than its actual worth of INR47.23, at a price tag of ₹34.85, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy 532366 shares at a low price. Furthermore, 532366’s PE ratio is trading at 16.71x while its Capital Markets peer level trades at, 23.53x suggesting that relative to its comparable company group, we can buy 532366’s stock at a cheaper price today. 532366 is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities.
More on PNB Gilts here.
Winsome Textile Industries Limited (BSE:514470)
Winsome Textile Industries Limited produces and sells yarns and fabrics in India and internationally. Founded in 1980, and now led by CEO Anil Sharma, the company provides employment to 2,141 people and with the company’s market capitalisation at INR ₹812.62M, we can put it in the small-cap stocks category.