Top 5 large cap undervalued stocks - YouTube

Hi, We use certain financial ratios while doing fundamental analysis of any company and one of them is – the P/E ratio.

Often investors try to identify undervalued stocks by using the P/E ratio.

If a company's PE ratio is low to its industry PE or relative to its close competitors, it is possible that the company is undervalued.

In today's video, we will tell you about 5 such large-cap undervalued companies whose PE ratio is lower than their industry PE ratio.

Keep in mind that you should decide if these companies are undervalued or not.

And this should not be the only factor for investing in any stock.

Furthermore, in the video, we have also considered that these companies should be fundamentally strong.

That's why in this list, we have considered only those companies whose:

Market cap is more than ₹20,000 crores,

Net profit margin is more than 15%,

Return on equity is more than 15%,

Debt to Equity Ratio is less than 1, and

The sales growth CAGR over the last 5 years is more than 10%.

The company which has the biggest difference between the PE ratio and the corresponding industry PE ratio, we will be told at the end.

Apart from this, for the numbers we have used in the video, we have considered the prices after the market closed on Monday, April 11.

So let's start today's list.

The first company is Deepak Nitrite Limited.

This company is one of the leading chemical manufacturing companies in India.

The PE ratio of the company is 28.64 and that of the industry is 30.44.

To calculate industry PE, we have considered 143 Indian chemical companies.

The Debt to Equity ratio of the company is 0.14.

In terms of profitability, the company has a Return on Equity of 39.62%, and a Net Profit Margin of 17.80%.

In the last 5 years, its sales have compounded at the rate of 26%.

The company's stock has grown by 36.07% in the last one year

In the last 5 years, the company has given a compounded annual return of 74.69%.

These are all fundamental metrics.

Let us now look at the stock from the perspective of technical analysis as well.

For this we will be using 2 indicators – 200 Days Moving Average i.e. 200 DMA and Relative strength Index (RSI).

200 DMA: The stock price of the company is currently at the level of 2264 and the 200 DMA is also almost at the same level around 2260.

The stock is slightly above its 200 DMA.

So 200 DMA indicator is indicating that the stock may be in an upward trend.

RSI: The daily RSI price is around 53.29 and if the RSI for any stock closes above 60, it is likely to start an uptrend.

In this case, the RSI is less than 60.

Next is Alkem Laboratories Limited.

It is involved in the development, manufacturing, and sale of pharmaceutical and nutraceutical products.

The company's PE ratio is 23.38 and the industry PE ratio is 28.47.

To calculate Industry PE, we have considered 66 pharma companies involved in bulk drugs and formulations.

The Debt to Equity ratio of the company is 0.21.

In terms of profitability, the company has a Return on Equity of 22.98%, and a Net Profit Margin of 17.91%.

In the last 5 years, the company's sales have compounded at the rate of 12.57%.

The company's stock has grown 22.77% in the last one year.

In the last 5 years, the company has given an annual return of 10.18%.

Now let's look at the stock from the angle of technical analysis.

200 DMA: The stock price of the company is currently at the level of 3475 while the 200 DMA is around the level of 3557.

So here the stock price is below the 200 DMA.

That is, the 200 DMA is suggesting that the stock is currently in bearish territory.

RSI: The daily RSI price is near 48.88 which is below 60.

So the RSI value is also suggesting that the stock is bearish right now.

The third company is Supreme Industries Limited.

This company is a leading plastic products manufacturing company in India.

The PE ratio of the company is 24.34 and that of the industry is 31.59.

To calculate Industries PE, we have considered the 80 Indian plastic product companies.

The Debt to Equity ratio of the company is 0.01.

In terms of profitability, the company has a Return on Equity of 35.91%, and a Net Profit Margin of 15.34%.

In the last 5 years, the company's sales have compounded at the rate of 16.52%.

The company's stock has grown by 5.05% in the last one year.

In the last 5 years, the company has given an annual return of 14.27%.

Let us now look at the stock from the perspective of technical analysis.

200 DMA: The stock price of the company is currently at the 2050 level while 200 DMA is at the 2178 level.

The stock also tried to cross the 200 DMA recently but it did not happen.

That is, the 200 DMA is suggesting that the stock is still bearish.

RSI: The daily RSI price is around 49.51 i.e. the RSI value is also suggesting that the stock is not yet bullish.

NMDC Limited is at number four.

This company is involved in the exploration and production of iron ore.

The PE ratio of the company is 4.90 and that of the industry is 13.07.

We have taken 34 mining, minerals, and metal companies to calculate Industry PE.

The Debt to Equity ratio of the company is 0 i.e. it is a debt-free company.

In terms of profitability, the company has a Return on Equity of 21.81%, and a Net Profit Margin of 40.74%.

In the last 5 years, the company's sales have compounded at the rate of 18.94%.

The stock of the company has grown by 19.72% in the last one year.

In the last 5 years, the company has given a compounded annual return of 5.39%.

Now let's look at the stock from the angle of technical analysis.

200 DMA: The company's stock price has recently gone above its 200 DMA.

200 DMA is 152 and currently, the stock price of the company is around 169 level.

That is, according to the 200 DMA, the stock is currently in the bullish zone.

RSI: The daily RSI price is around 62, which is slightly higher than 60.

So the RSI value is also suggesting that the stock may move up.

The fifth company is Oil India Limited.

The company is involved in the production and development of crude oil, natural gas, and LPG.

The PE Ratio of the Company is 5.69 and the PE Ratio of the Industry is 21.97.

To calculate Industry's PE, we have considered 6 companies involved in Indian Oil Drilling and Allied Services.

The Debt to Equity ratio of the company is 0.61.

In terms of profitability, the company has a Return on Equity of 16.27%, and a Net Profit Margin of 25.43%.

In the last 5 years, the company's sales have compounded at the rate of 12.41%.

The stock of the company has grown by 95.92% in the last one year

In the last 5 years, the company has given an annual return of 1.15%.

Let's now look at the stock from the perspective of technical analysis.

200 DMA: The stock of the company has seen good momentum in the last quarter.

The current market price is around 234 while the 200 DMA is near the 206 level.

That is, the 200 DMA is suggesting a strong bullish trend.

RSI: Lightweight daily RSI price is near the 51 levels which is not showing a bullish trend.

So these are the 5 companies whose PE ratio is less than their industry PE ratio.

You can see the names of all the companies and which industries they work in, on your screen.

We remind you that this video is for educational purposes only, and is not a buy or sell recommendation of any kind.

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