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Best performing under-valued companies: Godawari Power, Sanwarai Consumer and more

There are 320 stocks whose PE multiples are trading over 50% discount to their industry PE multiples. On an average, the group has outperformed the market by over 1.9 times in the last one year.

twitter-logoSameer Bhardwaj | March 16, 2018 | Updated 13:41 IST
Best performing under-valued companies: Godawari Power, Sanwarai Consumer and more

One of the easiest methods to spot undervalued companies is by looking at their PE multiple. PE or Price Earnings ratio (or multiple) is the amount that the investors are willing to pay for every rupee a company earns. It is calculated by dividing the market price by the earnings per share (EPS). Stocks with lower PE multiples compared to their industry multiples are considered under-valued.


There are 320 stocks whose PE multiples are trading over 50% discount to their industry PE multiples. On an average, the group has outperformed the market by over 1.9 times in the last one year. Out of 320 companies, 225 companies gained whereas 95 companies declined. Between 10 March 2017 and 13 March 2018, the group have delivered 32.19 per cent average returns. Sensex delivered 16.7% returns during the same period.

Let us look at the top five undervalued stocks that are trading at over 50 per cent discount to their industry average in terms of PE multiples and have given highest returns in the last one year:

Godawari Power & Ispat:  The Company is engaged in the business of manufacturing and trading of iron ore pellets, sponge iron, steel billets, wires and generation of power.  The current PE of the stock is 16.3 and it trades at over 53 per cent discount to the iron and steel industry average PE of 34.8. In Q3FY18, the company reported consolidated top-line growth of 43.9 per cent. It reported net profit of Rs 73.68 crores in Q3FY18 compared to net loss of Rs 9.59 crores in Q3FY17. The stock delivered 397.3 per cent returns between 10 March 2017 and 13 March 2018 and outperformed BSE Sensex by 23.8 times.

Sanwaria Consumer: A FMCG company engaged in the business of manufacturing and selling of Rice, edible oil and staple food products like Pulses, Sugar, Soya Chunks, Wheat Flour, Rice Flour, Salt, Suji, Maida, Besan, Daliya, Soya Meal etc. The current PE of the stock is 15.18 which is 53.7 per cent discount to the industry average PE of 32.8 times. On a standalone basis, the company reported top-line and bottom-line growth of 11.8 per cent and 119.9 per cent respectively in December 2017 quarter. The stock delivered 262 per cent returns in the last one year and outperformed BSE Sensex by 15.7 times.

Dilip Buildcon: A infrastructure company with business verticals in road construction, irrigation, urban development and mining. Company's clients includes National Highway Authority of India (NHAI), state governments and private companies. The current PE of the company is at over 63 per cent discount to the realty industry average PE. Currently the company trades at PE of 22.3 times compared to realty sector average PE of 60.8 times. In December 2017 quarter, the company's operating profit and net profit grew by 25 per cent and 51.6 per cent respectively. The stock delivered 207 per cent returns in the last one year. BSE Sensex delivered 16.7 per cent during the same period.

KSE: A FMCG company engaged in the manufacturing of compound cattle feed.  It is also engaged in the extraction of oil from copra cake by solvent extraction process and refining the same to edible grade and in dairying, including ice cream. The current PE of the stock is over 75 per cent discount to the FMCG industry average PE of 49.6 times. In Q3FY18, the  operating profit and net profit grew by 250.6 per cent and 287.2 per cent respectively. The stock outperformed BSE Sensex by over 12 times in the last one year and delivered 202.7 per cent returns.

Visaka Industries: The company is engaged in the manufacture and sale of Cement Asbestos Sheets, Fiber Cement Sheets (V-Boards), Panels and Spinning. The current PE of the stock at 17.8 times is at over 53 per cent discount to the construction materials industry average PE of 43.9 times. The net profit margin of the company jumped from 2.7 per cent in Q3FY17 to 5.9 per cent in Q3FY18. The stock delivered 187.7 per cent returns in the last one year and outperformed BSE Sensex by over 11 times.

 

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