Most fundamentally strong Indian stocks are trending down these days due to better buying opportunities for long-term investors with an ongoing market correction. Here are five discounted Indian stocks that are value bets in the near term:
HDFC Bank (NSE: HDFCBANK)
Why is it discounted: HDFC Bank stock price has been pressured due to market volatility and difficulties in the banking sector.
Investment thesis: HDFC Bank is one of India’s leading private banks, has an impressive balance sheet, high credit quality, and a growing retail presence. A stabilizing interest-rate environment would witness increased loan demand.
Current P/E Ratio: 19
Sector: Banking and Financial Services
Infosys (NSE: INFY)
Why discounted: Global economic uncertainty dampened the IT sector demand short-term.
Investment thesis: Infosys still is one of the major IT service companies of India with a robust international footprint. The recent correction in the stock provides an investment opportunity in an excellent blue-chip tech company that is well placed for long-term growth given the continuing digital transformation globally.
Current P/E Ratio: 20
Sector: Information Technology
Tata Motors (NSE: TATAMOTORS)
Why cheap: The stock is sensitive because the financials are showing better output even as concerns over demand for cars around the world, particularly in Europe and China, Jaguar Land Rover’s biggest markets linger.
Investment thesis: Tata Motors’ rise is on the back of solid growth by electric vehicles in India and good sales of the passenger as well as the commercial vehicle. Tata Motors’ aggressive play on EV leaves it well placed for future growth.
Present P/E Ratio: N/A (due to recent losses, but recovery parameters)
Sector: Auto
ICICI Bank (NSE: ICICIBANK)
Reason currently undervalued: General market correction has been so deep that even high-quality bank stocks have fallen
Investment rationale: ICICI Bank has consistently shown a steady improvement in asset quality, loan growths, and capabilities in digital banking. The banks put tremendous emphasis on retail and SME lending, leaving it in a great position to capitalise on the economic recoveries in India
Current P/E Ratio: 19
Sector: Banking and Financial Services
Larsen & Toubro (NSE: LT)
Why it’s undervalued: The stock has come under temporary pressure owing to worries about the infrastructure-spending being speeded up and input costs going up.
Investment thesis: As India’s premier engineering and construction conglomerate, L&T is better positioned for State-government infrastructure projects in highways, metro systems, and energy sectors. Its diversified business model and a strong order book also stand in place to face an economic slowdown.
P/E Ratio: 30
Sector: Engineering & Construction
Conclusion
At this discount, these are good value stocks. Again, a great deal of thought needs to be placed into researching the companies and their underlying circumstances prior to making an investment. These companies are for long-term investors only, who should look to ride out India’s growth potential after the market corrects.
