Companies that are recently trading at a market price lower than their real values include Vardhman Holdings and Kothari Products. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Vardhman Holdings Limited (BSE:500439)
Vardhman Holdings Limited operates as a non-banking financial company in India. Vardhman Holdings was founded in 1962 and with the stock’s market cap sitting at INR ₹12.13B, it comes under the large-cap stocks category.
500439’s stock is now trading at -66% less than its actual level of INR11138.14, at a price of ₹3,800.00, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy 500439 shares at a discount. Additionally, 500439’s PE ratio is trading at 4x while its Diversified Financial peer level trades at, 17.12x suggesting that relative to its competitors, 500439 can be bought at a cheaper price right now. 500439 also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 500439 has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into Vardhman Holdings here.
Kothari Products Limited (BSE:530299)
Kothari Products Limited, together with its subsidiaries, engages in international trade and real estate activities in India. The company was established in 1983 and has a market cap of INR ₹4.52B, putting it in the mid-cap group.
530299’s stock is now floating at around -72% lower than its real value of INR535.11, at a price tag of ₹151.50, according to my discounted cash flow model. The mismatch signals a potential chance to invest in 530299 at a discounted price. Additionally, 530299’s PE ratio is currently around 5.97x against its its Trade Distributors peer level of, 21.7x implying that relative to its peers, 530299 can be bought at a cheaper price right now. 530299 is also strong in terms of its financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 29.53% has been falling for the past few years signalling 530299’s ability to pay down its debt. More detail on Kothari Products here.