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Top Undervalued Stocks: List of the Most Underrated Sector Shares in India 2024

Top Undervalued Stocks: List of the Most Underrated Sector Shares in India 2024
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Imagine walking into a store and stumbling upon a hidden section tucked away in a corner, where you discover high-quality products at discounted prices. Already feeling excited, right? Well, the world of investing has its own version of this hidden treasure trove, known as undervalued stocks, not to be confused with under performing stocks. 

Just as savvy shoppers relish the opportunity to snag a bargain, investors seek out  underrated stocks in India that are trading below their intrinsic value. Most undervalued stocks India are like hidden gems in the stock markets, often overlooked by the majority of people. But for those who recognize their true worth, investing in undervalued stocks in India NSE can provide an opportunity to capture significant returns as the market at discounted prices.

In this blog, we will talk about the most undervalued Indian stocks and investing strategies.

What are Undervalued Stocks?

Undervalued stocks in India, commonly referred to as underperforming stocks, are essentially those that are trading at a price lower than their real or intrinsic value. Also called low intrinsic value stocks. In other words, the market may not fully recognize or appreciate the true worth of these value stocks. 

This could occur due to various reasons, such as temporary market conditions, company-specific factors, or investor sentiment. Identifying underperforming stocks India doesn’t potentially mean finding cheap stocks. The key is to look for quality undervalued stocks India at prices under their fair values, rather than useless stocks at a very low price. 

Therefore, by investing in undervalued Indian stocks, investors aim to capitalize on the potential for their price to rise in the future as the stock market catches up to their true value.

In contrast, an overvalued stock is said to be priced in the market higher than its perceived value.

Top 10 Undervalued Stocks in India 2024

Let’s have a look at the most undervalued Indian stocks in 2024 that you might be interested to invest in. The list of undervalued stocks in India belongs to the Nifty 500 sector universe, however, you can also check for undervalued stocks 2024 in Nifty 50.

Stock NameSub-SectorMarket Cap (in Cr)Share Price
ITC LtdFMCG - Tobacco₹5,84,521₹463.6
Asian Paints LtdPaints₹3,00,961₹2,999.45
Sun Pharmaceutical Industries LtdPharmaceuticals₹3,18,187₹1,382.1
Avenue Supermarts LtdRetail - Department Stores₹2,39,242₹3,727.75
Coal India LtdMining - Coal₹2,45,769₹382.6
Varun Beverages LtdSoft Drinks₹1,63,753₹1,266.35
Eicher Motors LtdTrucks & Buses₹1,01,231₹3,635
Bharat Electronics LtdElectronic Equipments₹1,41,371₹189.25
ABB India LtdHeavy Electrical Equipments₹1,00,676₹4,731.25
Dr Reddy’s Laboratories LtdPharmaceuticals₹93,836₹5,902.1

Note: The data on the top underperforming stocks India in the list is from 24th January 2024.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

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with a potential for high returns

Best Undervalued Stocks in India – Overview

Let’s have a look at the top undervalued stocks in India NSE down below:

ITC Ltd

ITC, known for its presence in multiple sectors such as tobacco, FMCG, and hospitality, may attribute its undervaluation to its potential for growth and stable financials. It is one of the best undervalued stocks to buy now in India on our list!

Asian Paints Ltd

Certain analysts view Asian Paints, a leading player in the paint industry and one the best undervalued stocks to buy now in India, as undervalued. Thus, with a strong market position and consistent performance, it may present an opportunity for investors seeking growth in the paint and coatings sector.

Sun Pharmaceutical Industries Ltd

Sun Pharma is a key player in the industry and one of the best undervalued stocks to buy now in India, focusing on research, development, and manufacturing of high-quality medicines. Has consistently contributed to healthcare advancements by providing affordable and innovative healthcare solutions.

Avenue Supermarts Ltd

Avenue Supermarts is the operator of the popular retail chain D-Mart, and one of the best undervalued stocks to buy now in India. Therefore, its unique retail model and strong growth in the retail sector make it an interesting choice for those seeking value in the consumer goods industry.

Coal India Ltd

Coal India, is a significant player in the coal mining sector. Challenges in the coal industry may be linked to the company’s undervaluation, but investors anticipating a turnaround could see it as a value opportunity.

Varun Beverages Ltd

Varun Beverages, a significant player in the beverage industry, and one of the top undervalued stocks 2024, is perceived as undervalued by certain analysts. Thus, with its association with PepsiCo and a growing market for beverages, the company’s undervaluation may attract investors seeking opportunities in the beverage sector.

Eicher Motors Ltd

Eicher Motors Ltd is a renowned Indian automotive company. It is widely recognized for its flagship brand, Royal Enfield, a leading manufacturer of premium motorcycles.

Bharat Electronics Ltd

Bharat Electronics, a leading defense electronics company, actively contributes to India’s defense capabilities. Therefore, the company’s role in the defense industry and technological capabilities may present an opportunity for investors seeking value in the defense and technology sectors.

ABB India Ltd

ABB India, a leading technology company, actively contributes to the country’s industrial landscape by providing innovative solutions in areas such as electrification, automation, and robotics. Additionally, ABB’s undervaluation may offer potential for investors looking for exposure to the industrial and technology sectors.

Dr Reddy’s Laboratories Ltd

Dr. Reddy’s, a prominent pharmaceutical company, is perceived as undervalued by certain market observers. Additionally, its presence in the generic pharmaceuticals market and potential for research and development may make it an appealing choice for investors seeking value in the healthcare sector.

How to Invest in Undervalued Stocks in India?

Investing in undervalued stocks in India can be done through a few different avenues. One common way is direct stock picking, where you research and choose individual companies. Another option is through mutual funds, investment portfolios that focus on value investing – these funds pool money from different investors and invest in a diversified portfolio of undervalued stocks in India. Additionally, exchange-traded funds (ETFs) centered on undervalued stocks India can be a convenient way to invest in a basket of such stocks that track a specific index.

However, if you’re confused about which stocks to pick, you can explore smallcases:

  1. smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
  2. They’re created and managed by SEBI-registered experts
  3. smallcase.com offers over 200+ stock portfolios, created by 180+ managers
  4. Some of the popular smallcases among new investors are as follows:

Equity & Gold smallcase by Windmill Capital

Top 100 Stocks smallcase by Windmill Capital

All Weather Investing smallcase by Windmill Capital

Disclosures for aforementioned smallcases

Key Factors and Ratios for Evaluating Undervalued Shares

When assessing the most undervalued stocks in India, several critical factors and ratios can come into play, providing investors with valuable insights about undervalued stocks in India.

  • Price-to-Earnings (P/E) Ratio: A lower P/E ratio of a stock suggests that a stock may be undervalued, as investors are paying less for each unit of earnings. 
  • Price-to-Book (P/B) Ratio: A lower P/B ratio implies that the stock may be undervalued relative to its book value. It suggests that investors are potentially paying less than the company’s net worth per share.
  • Dividend Yield: A stock with a higher dividend yield might indicate that investors can receive good returns on their investment through dividends, potentially suggesting undervaluation.
  • Earnings Per Share (EPS) Growth: A higher EPS growth rate indicates that the company is performing well and is likely to continue growing in the future. Thus, this can enhance the value of a stock and price-to-earnings (P/E) ratio.
  • Return on Equity (ROE): A higher ROE indicates that the company is efficiently utilizing its assets and generating a significant return on investment.
  • Debt-to-equity Ratio: The D/E ratio measures a company’s debt against its assets. A higher debt-to-equity ratio signifies that a company has more debt than equity.

What are the Advantages of Undervalued Shares??

Overall, undervalued shares can be a good investment for investors who are willing to take on some risk and who have a long-term investment horizon. However, it’s important to look at the advantages and disadvantages of underperforming stocks India.

Advantages

  • Potential Returns: Undervalued stocks in India are typically trading below their intrinsic value, which means that they have the potential to appreciate in value over time. 
  • Lower Prices: It presents an opportunity for investors to buy undervalued power stocks India at lower prices than what they have to pay for stocks that are trading at their fair value. 
  • Value Investing: Investing in undervalued stocks in India is a basic strategy in value investing. It involves identifying stocks that are trading below their intrinsic value and holding them until their value goes up.

Disadvantages

  • Limited Liquidity: Undervalued power stocks India may have limited trading volume, which makes them difficult to sell quickly when needed.
  • Longer Time-Horizon: Investing in undervalued power stocks india can be a longer time horizon as the market may take time to realize the company’s true value.
  • Risk of Loss: There is always the risk that an undervalued stock will not appreciate in value. In fact, the stock can continue to decline in value, or it may even go bankrupt.

What are the Strategies for Mitigating Risks and Maximizing Returns?

While not under performing stocks, undervalued stocks 2024 do come with a couple of risks. There are a number of strategies that investors can use to mitigate risks and maximize returns while investing in the most undervalued stocks India. Some of these strategies include:

  • Diversification: By investing in a variety of most undervalued stocks in India, you can reduce your risk if one stock performs poorly.
  • Do Your Research: Before investing in any undervalued stock, research company’s balance sheets, read analyst reports, and follow industry news. 
  • Invest for the Long Term: Undervalued stocks in India can be volatile in the short term, but they have the potential to appreciate in value over the long term.
  • Set Realistic Expectations: Don’t expect to get rich quickly. Instead, focus on investing for the long term and gradually building your wealth.
  • Use Stop-Loss Orders: A stop-loss order is an order to sell a stock if it falls below a certain price. This can help you to limit your losses if an undervalued stock begins to decline in value.

As always, investors must do their own research and/or consult their financial advisor before investing.

To Wrap It Up…

Undervalued stocks in India have a market value that is lower than their intrinsic value. They offer the chance to purchase shares from well-established companies at a lower price. However, it is important to do your research and understand the risks involved before investing in any undervalued stock.

FAQs

1. What are the best undervalued stocks to buy for long term in India?

The top 5 undervalued stocks in India according to the recent data are: 

1. ITC Ltd
2. Asian Paints Ltd
3. Sun Pharmaceutical Industries Ltd
4. Avenue Supermarts Ltd
5. Coal India Ltd

Note: This information is provided for educational purposes and is not intended as a recommendation or endorsement.

2. How can I invest in underperforming stocks?

Here are some common steps that a beginner investor must follow while investing in underperforming stocks India:

1. Do your research
2. Identify quality stocks
3. Set a long-term investment horizon
4. Don’t panic sell
5. Diversify your portfolio
6. Rebalance your portfolio regularly

We understand how overwhelming the process can be, therefore, you can simply invest in smallcase and sit back to relax.

3. Is it a good time to invest in under value share?

Investing in the best undervalued stocks India may only benefit the investor as they can buy at a lower price and sell at a high price in future. Investors must consider their investment goals and risk appetite before investing in undervalued shares.

4. Who should invest in most undervalued stocks India?

Investing in the most undervalued stocks India NSE can yield substantial returns. Considering to invest in an undervalued stock list can be a good investment if you are willing to take on some risk and have a long-term investment horizon. However, one must consider their investment goals and risk appetite before investing.

5. Why do stocks become undervalued?

There are many reasons why stocks can become undervalued. Some of the most common reasons include negative news, marketwide downturn effect, weakness in specific sectors, and mispricing.