Stocks, such as Chemo Pharma Laboratories, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.

Chemo Pharma Laboratories Limited (BSE:506365)

Chemo Pharma Laboratories Limited does not have significant operations. Chemo Pharma Laboratories was established in 1942 and with the company’s market capitalisation at INR ₹58.28M, we can put it in the small-cap category.

506365’s shares are now hovering at around -93% under its true value of INR549.5, at the market price of ₹38.85, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In addition to this, 506365’s PE ratio is trading at 1.3x relative to its Diversified Financial peer level of, 20.57x implying that relative to its comparable set of companies, you can buy 506365’s shares at a cheaper price. 506365 is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. 506365 has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into Chemo Pharma Laboratories here.

Available Finance Limited (BSE:531310)

Available Finance Limited, a non-banking financial company, provides various financial services. Available Finance was formed in 1993 and has a market cap of INR ₹82.96M, putting it in the small-cap group.

531310’s stock is currently floating at around -97% less than its true value of INR315.12, at the market price of ₹8.13, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy 531310 shares at a low price. What’s even more appeal is that 531310’s PE ratio stands at around 0.28x while its Diversified Financial peer level trades at, 20.57x implying that relative to other stocks in the industry, 531310 can be bought at a cheaper price right now. 531310 is also a financially robust company, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 3.99% has been dropping over the past couple of years demonstrating 531310’s ability to reduce its debt obligations year on year. More on Available Finance here.