Now, first the caveat. When we say low priced stocks, we do not mean in terms of stock prices alone, but, also in terms of price to earnings multiples, dividend yields, book value etc.
Mangalore Refinery and Petrochemicals is a great low priced stock for a number of reasons. The first is that the company is expanding its capacity. In the next few years the capacity would stand increased to 25 mmtpa. Along with the capacity expansion the distillate yields are expected to improve.
There is also a forward integration that is happening at the company through its propylene unit. All this is expected to expand the margins at the company. In fact, the company has great refining capabilities to handle heavy and sour crude.
The economy of scale and expansion completion in the next few years, should see value emerge in the stock.
MRPL: Great on dividend and fundamentals
The other reason to be recommending this stock is that it gives an excellent dividend yield. These days bank deposits offer you 7 per cent interest rate and if you are in the highest tax bracket your yield would be as low as 5 per cent.
On the other hand, the dividends of MRPL itself offers you a tax free dividend yield of 5 per cent. There is no dividend on taxes upto Rs 10 lakhs. In terms of valuations the stock is available around 7.5 times price to earnings at the current market price of Rs 121. A great stock to own at the current levels.
Of course, surging crude prices pose the biggest risk to the stock price.
Gujarat Industries Power
This is another company like MRPL which is highly undervalued at the current levels. The reasons for such undervaluation cannot be understood.
This company is a government of Gujarat owned company that is into almost all of the different ways to produce power. Gujarat Industries commissioned its first power project, of a 145 MW gas based Combined Cycle Power Plant in February, 1992.
Thereafter, it started a 5 MW photovoltaic Solar Power Station in 2012, a Wind Power Projects as different sites in Gujarat in 2017. It also has a 250 MW Lignite based Power Plant at Nani Naroli and a 165 MW Naphtha & Gas based Combined Cycle Power Plant at Vadodara.
Gujarat Industries Power: Relatively cheap on valuations
Gujarat Industries Power is one of the best low priced stocks to invest in India. The company saw its net profits jump from Rs 187.79 crores in 2015-16 to Rs 251 crores in 2016-17. The EPS of the company has moved to Rs 15.16 from Rs 12.45.
Now, at the current market price of Rs 132, the stock is available at a trailing p/e of just 8 times. This is just like Chennai Petroleum where the stock remains cheap and one of the best. The dividend yield is a decent 2.59 per cent and the price to book is just about 0.71 times. This is one of the better stocks to buy.
NMDC is a government owned company that is into iron ore mining. It is a cash rich and debt free company. This is a stock that you should buy for two reasons: The first is that the price has fallen from levels of Rs 145 to Rs 130, making it much cheaper than what it was a few months ago.
The second is the dividend. In 2016 the company declared a dividend of Rs 11 per share, which means on a stock price of Rs 110 you get a dividend yield of exactly 10%. Now, say the company does not retain the same dividend and pays only Rs 8, because of a subdued performance. Even then your dividend yield will be very decent.
We believe that iron ore prices are likely to remain elevated, which should keep the shares elevated. The stock is available at just 1.1 times book. A good low priced stock to buy at Rs 110. Check stock quote here
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