Value stocks are stocks that are currently trading at a lower price lower than they shouldit should be if based on theirits current dividends and revenues. Value stocks, therefore, exist because of inefficiencies in the market that lead them to see their prices temporarily be lower than the logical value. It is assumed that the market will eventually find out the fact that it is undervalued and rectify the price mismatch the market price will be corrected – thus creating capital gains for its new owners.
A value stock may come from a large, mature company that has been issuing consistent dividends to its shareholders but has been experiencing little share price appreciation due to stagnation or a dip in stock price because of due to a temporary negative event.
A value stock may also be a fairly new company whose strong fundamentals have not yet been spotted by the major players in the market.
However, a good way to assess whether a stock is a value stock or not is by checking the following metrics –
Once you find a group of stocks that you consider as value stocks, you can buy them and hold them until the market corrects itself and those stocks reach a value that they are supposed to reach logically over time.
The following are some of the stocks that some may consider as value stocks in 2023, based on the aforementioned metrics.
| Name of the stock | ROCE | EBITDA Margin (%) | Debt to Equity Ratio | P/E Ratio | Sector P/E Ratio |
| Coal India Ltd. | 31.70 | 29.94 | 8.02 | 5.19 | 15.13 |
| Colgate-Palmolive (India) Ltd. | 77.77 | 31.06 | 4.79 | 39.53 | 47.39 |
| Accelya Solutions India Ltd. | 37.81 | 37.77 | 9.50 | 25.29 | 23.66 |
| IOL Chemicals and Pharmaceuticals | 14.16 | 11.20 | 3.16 | 16.75 | 15.13 |
| TCS Ltd. | 58.09 | 27.39 | 8.43 | 28.05 | 23.66 |
These stocks have been chosen based on various metrics as mentioned in the table. Whether a stock is a value stock or not is a highly subjective matter and not very easily predictable. Therefore, the aforementioned stocks are definitely not recommendations.
It is one of the most reputed public sector units in India which is focused on the production and distribution of coal. It serves several different sectors such as power, steel, fertiliser, brick and kiln etc.
Market Cap: Rs. 1,46,285 cr.
1-year growth in stock price: 29.12%
It is a famous FMCG company that is focused on personal care and oral care products such as soaps, toothpaste and other toiletries and cosmetics.
Market Cap: Rs. 42,627 cr.
1-year growth in stock price: 0.05%
The company provides software solutions and consultancy to other companies, especially those in the airlines and travels industry. The domains in which they offer solutions primarily include finance and audit.
Market Cap: Rs. 1,927 cr.
1-year growth in stock price: 30.89%
It is a major pharmaceutical (APIs) company, serving markets in both India and abroad. Interestingly, it happens to be the largest producer of Ibuprofen pain killers, enjoying a 35% market share.
Market Cap: Rs. 2,310 cr.
1-year growth in stock price: -0.14%
TataThe Tata Consultancy Services Ltd. or TCS is the leading player in the IT consultancy market and also happens to be one of the largest companies in the world. It receives orders from major organisations across the world and across sectors for supporting the IT infrastructure of the latter.
Market Cap: Rs. 11,82,129 cr.
1-year growth in stock price: -4.70%
Value stocks are some of the most exciting things to trade. This is because it involves trading an asset against the general sentiment of the market with respect to that stock. If you too want to feel this excitement by trading in the stock market then open demat account with Angel One, India’s trusted broker.
Disclaimer: This article has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.
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