Attractive Shares Below Rs 100 To Buy For The Long Term

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Here are a few stocks that are under Rs 100 and could be worthy picks. Buy them if you have a time frame of 2-3 years. It is important to note that before you take position in these stocks, that stocks below Rs 100 tend to be very volatile. So just be careful before buying and ideally set a target. For example, if you see a stock at Rs 82, just wait as you may even get the stock low. Do not rush to buy the stock. At all times the price should be kept in mind. Here are a few stocks to consider.

Reliance Home

Reliance Home Finance is a stock that was carved out off Reliance Capital. This stock got listed at Rs 114 and has fallen since to Rs 87.

At the time of listing most brokerages had estimated the stock to list around Rs 120, which would be 3 times anticipated book value for 2018 of Rs 40. However, the shares of Reliance Home Finance have fallen consistently and at these levels they look very attractive.

One of the top reasons to recommend this stock would be the home finance business, which is itself growing at a rapid pace of 20 per cent. This leaves immense potential to cater to a growing market for the company.

The management of the company had recently said that it plans to increase its book size to a staggering Rs 50,000 crores in the coming years. The book size at the moment is around Rs 13,000 crores. Going ahead this should augur well for Reliance Home Finance.

Check stock quote of Reliance Home Finance

Valuations of Reliance Home Finance

The stock of Reliance Home Finance is barely traded at 2 to 2.5 times anticipated book value. This is much lower than peers like Gruh Finance, Repco Home or even any of the larger players like HDFC, PNB Housing Finance, Dewan Housing Finance, Indiabulls Housing Finance etc.

This leave tremendous scope for Reliance Home Finance in terms of valuations. Sentiments for ADAG group stocks have been hit recently on account of the RCom deal falling through. However, we believe that this provides an opportunity for long term investors to enter the stock.

Gitanjali Gems

The Gitanjali Group (GG) is one of the top integrated jewelery manufacturers not only in India, but, also around the world. The group owns some very fine brands in Gili, Asmi etc.

In fact, GG as a whole owns more than 75 brands. They have a heavy retail presence in many countries including the United States, where they have 120 stores and about 500 retailers. The group also owns 200 stores and has 150 franchisee shops.

In the last few quarters we have seen some recovery in earnings for Gitanjali Gems. In fact, the company also declared a small dividend of 5 per cent. Gitanjali Gems has a huge book value of  Rs 380 and the stock is quoting at just about Rs 64, which makes the price to book at just around 0.17 times.

This is unheard of when the Sensex has breached the 33,000 points. Gitanjali Gems is a good bet for those willing to take risk. At Rs 64, the downside seems to be very limited. The stock is available at a p/e of just about 7 times one year forward earnings. A good share under Rs 100 to buy and sell on rallies.

Check stock quote of Gitanjali here

IDFC Bank

This is a private sector bank promoted by IDFC. If you have a very long term view of say about 5 years this stock should yield good results.

The bank reported decent numbers and the Gross non performing assets was just 3 per cent and the net NPA was 1.14 per cent for the quarter ending March 31, 2017.

Most of the private sector banks receive heavy discounting with these kind of NPAs. The EPS of IDFC bank was Rs 3 for FY 2017. This means the stock gets a discounting of near 18 times at the current price of Rs 57.

This is reasonable and almost at par with what other banks in the country get. However, if you have a very long term perspective with the net profits and EPS growing you could easily see the stock doubling in the coming years. Not a bad bet at the current levels.

A list of small cap stocks that you can buy

We have also in the past recommended some small and mid cap stocks that you should own. These have the potential to generate good returns in the coming years. Read by clicking on the links below:

Best small cap stocks to own

Best midcap stocks to own

Taxation on shares below Rs 100

It is important to note that if you sell your shares at a profit before one year, you are liable to pay taxes and its does not matter whether your shares are under Rs 100 or not.

Short term capital gains tax on shares is applicable if you sell your shares before one year. On the other hand, if you sell your shares after a period of one year, there is no tax that is applicable. So, you need to factor the same before you sell your shares.

It is advised that if you are making a decent sum you can also pay the required taxes on the same. There are roumours that the Union Budget 2017-18 could also consider a change in the norms for how capital gains is charged. So far we do not know of any such move. Will have to wait and watch. 

Disclaimer

The article is not a solicitation to buy, sell in securities or other financial instruments mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and do not accept culpability for losses and/or damages arising based on information in this article.

Also read: A look at the best high return investments in India

Also read: The best dividend yield companies in India

 

 

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