Markets are now trading at valuations that are pretty fair. There are many stocks that have now risen to levels that are pretty high. We have identified select stocks that are under Rs 100 and have the potential to rally from here.
South Indian Bank
If you are looking to bet on a smaller sized bank, it would be a good idea to put your money on South Indian Bank. The stock at Rs 21, has the potential to rally. At a time when most banks are seeing a lot of stressed assets, the situation is not too bad for South Indian Bank. The bank reported gross non performing assets of 3.96 for the quarter ending Sept 30, 2016. This is not as bad as it seems. In fact, the non performing assets were flat, when compared to the previous quarter which is good news. The bank has a small equity capital of Rs 135 crores.
Valuations of South Indian Bank
The bank reported an EPS of 0.82 for the quarter ending Sept 2016. It is highly possible if the economic situation improves in the next few quarters, the bank can report an EPS of Rs 3.5 for the full year. This means the stocks is available at a price to earnings ratio of just about 6 times. The stock is highly undervalued at the current levels. The stock also gives a good dividend yield of around 2.38 per cent. The shares are a good buy at the current levels. Check stock quote here
This is another stock under Rs 100, that could be a worthy fit in most portfolios. Sintex is one of the largest producers of plastic water tankers in the world with a solid brand equity. However, today the company is well diversified into a host of products. Among these include prefab for construction and housing, a textile division, which is also showing very high growth.
Not very expensive
Shares of Sintex are not too expensive at the current levels. In fact, the company had an exceptional performance for the quarter ending Sept 30, 2016, wherein it reported very good earnings. The EPS for the period was a solid Rs 3.58. If the company keeps up the same momentum it can report an EPS of Rs 14 for the full year. The stock at Rs 84, is trading at a p/e of just 6 times. The stock is also trading below its book value of Rs 99. This makes it an excellent pick at the current levels .
Until recently, the stock of Welspun India was consistently trading above Rs 100, however, after reports that Target Corporation had severed ties with the company for substituting cheaper cotton variety instead of Egyptian cotton in bedsheets, the stock dropped sharply from levels of Rs 107, the stock is now below Rs 100, which makes it an attractive buy. The company is one of the largest manufacturers of terry towels and is Ranked 1st among Home Textile Suppliers in the US. it supplies to every top manufacturers from Walmart to J C Penney.
Fundamentally the stock is pretty reasonably valued at the current levels. We believe that despite the loss of order from Target Corporation it can still report an EPS of Rs 6 for 2017-18. Hence, at the current market price of Rs 84, it is not a bad bet.
This is another bank like South Indian Bank that may not really be a bad bet, if one is ready to have some patience. The stock is likely to boast a decent set of results in the coming quarters. For example, the stock is available at a price to earnings multiple, which is not very expensive. We believe that for 2016-17, the bank can report an EPS of Rs 10 on a very conservative estimates. At the current price of Rs 68, the stock is trading at a p/e of just about 7 times, one year forwards earnings. The stock can be bought if one has a long term perspective in mind. Economic recovery may push the stock to greater heights in the coming days.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any shares in the above mentioned stocks.