Transcorp International and Octaware Technologies may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
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 capitalisation at INR ₹1.01B, we can put it in the small-cap stocks category.
532410’s stock is currently floating at around -73% under its actual worth of INR147.36, at the market price of ₹39.70, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy 532410 shares at a discount. In terms of relative valuation, 532410’s PE ratio stands at 4.32x relative to its Consumer Finance peer level of, 25.43x implying that relative to its peers, 532410’s stock can be bought at a cheaper price. 532410 also has a healthy balance sheet, 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 dropping over the past couple of years indicating 532410’s capability to pay down its debt. More on Transcorp International here.
Octaware Technologies Limited (BSE:540416)
Octaware Technologies Limited provides a range of information technology solutions. The company was established in 2005 and has a market cap of INR ₹276.47M, putting it in the small-cap category.
540416’s stock is currently trading at -65% under its intrinsic level of INR217.99, at the market price of ₹77.00, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy 540416 shares at a low price. Also, 540416’s PE ratio is around 5.92x while its Software peer level trades at, 21.55x suggesting that relative to its comparable set of companies, we can buy 540416’s stock at a cheaper price today. 540416 is also robust in terms of financial health, with current assets covering liabilities in the near term and over 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. Neha International was established in 1993 and with the market cap of INR ₹157.51M, it falls under the small-cap group.
519560’s stock is now hovering at around -90% beneath its true value of INR57.47, at a price tag of ₹5.55, according to my discounted cash flow model. This discrepancy gives us a chance to invest in 519560 at a discount. Additionally, 519560’s PE ratio is currently around 13.56x relative to its Food peer level of, 22x meaning that relative to its comparable set of companies, 519560’s stock can be bought at a cheaper price. 519560 is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. 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.