Undervalued companies, such as Moongipa Capital Finance and Sportking India, are those that trade at a price below their actual values. 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.
Moongipa Capital Finance Limited (BSE:530167)
Moongipa Capital Finance Limited engages in financing activities in India. Started in 1986, and headed by CEO Pooja Jain, the company provides employment to 16 people and with the market cap of INR ₹27.49M, it falls under the small-cap group.
530167’s shares are now trading at -61% under its intrinsic value of INR23.37, at the market price of ₹9.00, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Additionally, 530167’s PE ratio is trading at around 3.91x while its Consumer Finance peer level trades at, 28.12x meaning that relative to its competitors, we can invest in 530167 at a lower price. 530167 is also in great financial shape, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 5.19%, which has been declining for the past few years signifying its capability to reduce its debt obligations year on year. More on Moongipa Capital Finance here.
Sportking India Limited (BSE:539221)
Sportking India Limited manufactures and sells cotton, synthetic, and blended yarns in India. Formed in 1989, and run by CEO Raj Avasthi, the company employs 4,714 people and with the stock’s market cap sitting at INR ₹197.46M, it comes under the small-cap category.
539221’s stock is currently hovering at around -95% lower than its intrinsic level of INR1148.51, at a price tag of ₹55.45, based on its expected future cash flows. The mismatch signals a potential chance to invest in 539221 at a discounted price. What’s even more appeal is that 539221’s PE ratio stands at 2.36x while its Luxury peer level trades at, 18.23x suggesting that relative to its comparable company group, 539221’s stock can be bought at a cheaper price. 539221 is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 164.05% has been reducing over the past couple of years signifying 539221’s ability to reduce its debt obligations year on year. Dig deeper into Sportking India here.