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Best Value Stocks in India 2023 for Portfolio Investing

Best Value Stocks in India 2023 for Portfolio Investing
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If you’re looking to invest in the stock market, you may have heard of value stocks. But what exactly are they, and why should you consider them for your investment portfolio? This blog will explore the concept of value stocks, their benefits, how to identify them, and common mistakes to avoid when investing in them.

Let us now understand what is a value stock.

What are Value Stocks?

Shares of companies that are trading at a discount are known as value shares. Since investors have yet to see the firm’s potential, they are typically regarded as undervalued stock in the share market. As a result, the price of these stocks doesn’t correspond to the company’s strengths or prospects. The majority of them are young, emerging businesses. Since many of them operate in industries like IT that are saturated with powerful corporations, they must perform well in order to attract investors’ attention.

Value stock investing is based on the idea that the market will recognise the stock’s true potential, and it will increase in value while making strong returns.

Top value stocks list to consider in 2023

Here are the best value stocks to consider in India:

Company NameMarket Cap (in Cr)Share Price
LTIMindtree Ltd₹1,62,316₹5,508.65
Accelya Solutions India Ltd₹2,354₹1,543.3
Tata Consultancy Services Ltd₹12,64,293₹3,480.65
Housing and Urban Development Corporation Ltd₹15,654₹75.45
CRISIL Ltd₹28,337₹3,925.85
Coal India Ltd₹1,68,858₹278.95
Alkyl Amines Chemicals Ltd₹12,722₹2,496
Hindustan Unilever Ltd₹5,89,148₹2,536.25
Manali Petrochemicals Ltd₹1,170₹71.35
Colgate-Palmolive (India) Ltd₹54,821₹2,010.8

Note: The data in the list is from 10th September 2023.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

Is value stock a good investment?

Risky investment: Because value stocks are inexpensive, they have lower metric ratios. When the market corrects prices, value shares are anticipated to appreciate in value eventually. Investors run the risk of losing money if the stock doesn’t increase in value as predicted. Value shares are, therefore, a bit riskier as an investment.

Overview of the best value stocks in India

The valuation of stocks indicates that these are the Value Shares to look out for in 2023! Here is a brief overview of the best Value Stocks to invest in India. The stock value of these companies is very high:

LTIMindtree Ltd

LTIMindtree, formerly Larsen & Toubro Infotech, is an India-based global technology consulting and digital solutions company. On a trailing 12-month basis, it records an operating revenue of Rs. 34,240.90 Cr. With an outstanding annual revenue growth of 109%, a great pre-tax margin of 17%, and an exceptional ROE of 26%.

Accelya Solutions India Ltd

Accelya Kale Solutions Limited provides software solutions to the airline and travel industry. The Company also offers services, such as computer programming, consultancy and related activities. On a trailing 12-month basis, it reports an operating revenue of Rs. 469.36 Cr. With an outstanding annual revenue growth of 27%, a great pre-tax margin of 36%, and an exceptional ROE of 46%.

Tata Consultancy Services Ltd

Tata Consultancy Services Limited (TCS) is engaged in providing information technology (IT) services, digital and business solutions. On a trailing 12-month basis, it records an operating revenue of Rs. 232,081.00 Cr. It exhibits an outstanding annual revenue growth of 17%, a great pre-tax margin of 25%, and an exceptional ROE of 46%.

How to invest in value stocks?

Value stocks in India can be valuable to any investment portfolio, providing diversification and potential returns.

One way to invest in value shares is through traditional stock market investing. This involves researching individual companies and buying shares of stock directly. The importance of valuation here is great. 

Another way to invest in value stocks in India is through exchange-traded funds (ETFs). Investors can choose from various value-oriented ETFs, which provide exposure to a diversified portfolio of valued shares.

Mutual funds are another option for investing in value shares. These are professionally managed investment portfolios that pool money from multiple investors to buy a diversified portfolio of stocks. Like ETFs, there are a variety of mutual funds that focus on value investing.

Investing in value stocks via smallcase

You can also invest in a basket of value stocks via smallcase. Simply go to smallcase.com or the smallcase app, and login via your phone number. Then, go to ‘Discover‘ and then click on ‘All smallcases‘. There you can filter the smallcases based on ‘investment strategy’ by selecting ‘value’. You’ll find an array of stock portfolios that are based on the value investing strategy. Just pick the one that fits your investment criterion.

Make sure that you do your diligent research before picking the right stock, keeping in mind your long-term investment goals and risk appetite. 

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

  1. smallcases are readymade portfolio 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

Disclosures for aforementioned smallcases

Factors to help identify a Value Stock

Here are some measures used by investors to estimate the value of a company’s stock:

  1. P/S ratio or the Price-to-sales ratio: In this approach, the estimation is made by dividing the market capitalization by the total annual income of the firm. Market capitalization is calculated by multiplying the number of outstanding shares by the share’s current market value. A low price-to-sales ratio could be an indicator of a value stock.
  2. P/E ratio or Price-to-earnings ratio: It is determined by dividing the stock price by the company’s earnings per share. The ratio makes it easier to see how the market’s stock price and actual earnings per book are connected. Low price-to-earnings ratio shows that it’s an undervalued share because the market has not yet realized its potential.
  3. P/B Ratio or the Price-to-book ratio: This is calculated by dividing the stock price of a company by its book value. The ratio of a company’s common shares to its outstanding shares is called book value per share (BVPS). This shows the asset value of a corporation on a per-share basis.
  4. Free cash flow: You should also look out for a company’s free cash flow, which represents a company’s net cash flow following all capital and operating expenses.
  5. Historical performance: To determine how they will fight bears in the future, you may also examine their past performance and how they have handled challenging economic times. Additionally, you may examine their future goals and determine how much potential they have.

What are the features of Value stocks?

Here are the various characteristics of Value Stocks:

  1. Strong dividend payout: Value stocks in India are often those of large, well-established businesses that are discounted for a number of reasons, such as poor PR, a weak earnings season, etc., but who eventually recover their value over the long run. They often have strong dividend payout ratios and don’t spend their full retained earnings back into the business.
  2. Cheaper price: The stock’s price is typically lower than other stock categories. This facilitates financial investment in them.

Risks to look out for while investing in Value Stocks

Here are a few common mistakes that can become potential risks, while investing in Value Stocks. 

  • Focusing solely on low price: A low price does not necessarily indicate a good value investing stocks.
  • Ignoring fundamental analysis: It’s important to conduct a thorough fundamental analysis to ensure the company has strong fundamentals.
  • Overlooking market trends: While investing in value shares requires a long-term strategy, it’s also important to consider market trends and potential headwinds.
  • Not having a long-term investment strategy: Investing in value stocks requires patience and a long-term investment horizon.

Advantages of investing in Value Stocks

Here are the various advantages of investing in Value Stocks:

  • Historical performance: Historically, value stocks have outperformed growth stocks over the long term.
  • Lower risk: Value shares are often considered less risky than growth stocks and the downside risk may be limited.
  • Long-term investment: Investing in value stocks requires a long-term investment strategy, which can help to reduce the effects of short-term market volatility.
  • Diversification: Investing in value shares can help to diversify your portfolio and reduce overall portfolio risk.

To Wrap It Up…

In conclusion, investing in a value investing strategy can be apt for any investment portfolio. By identifying these stocks with the potential to rise in value over time, investors can achieve diversification, potential returns, and a margin of safety. Whether you choose traditional stock market investing, ETFs, or mutual funds, it’s important to do your research and consider the company’s financial health, growth potential, and industry trends before making a decision.

Remember, investing in value shares requires patience and a long-term perspective, but it can be a rewarding way to build wealth over time.

FAQs

1. What are the best Value Stocks to buy in India?

The best Value Stocks to invest in currently are:
1. LTIMindtree Ltd
2. Accelya Solutions India Ltd
3. Tata Consultancy Services Ltd

2. How can I invest in Value stocks?

You can invest in a basket of value stocks via smallcase. Simply go to smallcase.com or the smallcase app, and login via your phone number. Then, go to ‘Discover‘ and then click on ‘All smallcases‘. There you can filter the smallcases based on ‘investment strategy’ by selecting ‘value’. You’ll find an array of stock portfolios that are based on the value investing strategy.

3. Is it a good time to invest in Value  stocks?

In 2022, value stocks outperformed growth stocks as the Federal Reserve raised interest rates. However, in 2023, growth stocks have outperformed value shares so far. Thus in the battle of value stocks vs growth stocks, both seem promising.

4. Who Should Invest in Value Stocks?

Defensive investors with low risk tolerance can find value stocks appealing. These shares offer protection against losses and the potential for gains when the market realizes their true value during stock valuation.

5. Can Value stocks be profitable for investors?

Value stocks, compared to growth stocks, carry lower risk. They exhibit greater stability and lower volatility, providing moderate potential for capital appreciation while offering a consistent income stream through dividends.