Stocks, such as Transcorp International, trading at a market price below their true values are considered to be undervalued. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Transcorp International Limited (BSE:532410)
Transcorp International Limited provides foreign exchange, inward remittance, and payment solutions in India. Transcorp International was founded in 1993 and with the company’s market cap sitting at INR ₹1.01B, it falls under the small-cap stocks category.
532410’s stock is now trading at -73% under its actual value of INR147.36, at the market price of ₹39.70, based on its expected future cash flows. This discrepancy gives us a chance to invest in 532410 at a discount. In terms of relative valuation, 532410’s PE ratio is currently around 4.32x while its Consumer Finance peer level trades at, 25.43x implying that relative to its comparable company group, 532410’s shares can be purchased for a lower price. 532410 is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 45.27% has been falling over the past couple of years showing 532410’s capacity to reduce its debt obligations year on year. More on Transcorp International here.
Octaware Technologies Limited (BSE:540416)
Octaware Technologies Limited provides a range of information technology solutions. Octaware Technologies was started in 2005 and with the market cap of INR ₹276.47M, it falls under the small-cap stocks category.
540416’s stock is currently trading at -65% beneath its real value of INR217.99, at a price of ₹77.00, based on my discounted cash flow model. This mismatch indicates a chance to invest in 540416 at a discounted price. Also, 540416’s PE ratio stands at around 5.92x compared to its Software peer level of, 21.55x meaning that relative to its comparable company group, we can invest in 540416 at a lower price. 540416 is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 540416 has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Continue research on Octaware Technologies here.
Neha International Limited (BSE:519560)
Neha International Limited engages in the floriculture, agri-farming, and agri goods trading businesses. The company was established in 1993 and has a market cap of INR ₹157.51M, putting it in the small-cap stocks category.
519560’s shares are now hovering at around -90% lower than its value of INR57.47, at a price tag of ₹5.55, according to my discounted cash flow model. This difference in price and value gives us a chance to buy low. Also, 519560’s PE ratio stands at 13.56x compared to its Food peer level of, 22x suggesting that relative to its comparable set of companies, 519560’s stock can be bought at a cheaper price. 519560 is also robust in terms of financial health, as current assets can cover liabilities in the near term and over the long run.
Interested in Neha International? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.