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.
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 130 to Rs 110, 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. The stock is available at just 1.1 times book. A good low priced stock to buy at Rs 110. Check stock quote here
Chennai Petroleum is a group company of Indian Oil, but unlike refining peers like HPCL and BPCL, the company gets very poor discounting, which makes it a very good low priced stock to buy. Chennai Petroluem has two refineries. The Manali refinery is a very complex refinery and produces fuel, wax and a host of petrochemical products. The other refinery is at Naggapatinam and produces a host of products like Fuel, Oil, Hexane, Petrochemical feed stocks etc. This is one of the cheapest oil refinery stocks available at the moment and at very cheap valuations.
Reasons to buy Chennai Petroleum
Chennai Petroleum had a fantastic 2016-17, wherein net profits jumped to Rs 1050 crores from Rs 761 crores in the previous year ending March 31, 2016. That was a smart jump and we believe that the profits would sustain. The one reason for that belief is because there is a high possibility of crude prices remaining lower for a prolonged period of time. When that happens, the margins would continue to sustain. In 2016-17, Chennai Petroleum reported a EPS of Rs 70, which on the current market price of Rs 382 is just about 5 times. Today, the Sensex is trading at a staggering 31,000 points and at this time it is difficult to get stocks, which are barely trading at 5 times p/e. The price to book at 1.82 times is also attractive. The board has declared a staggering dividend of Rs 21 per share and if the momentum of dividend is maintained that in itself is a good 6 per cent tax free dividend yield. This remains one of the best low priced stocks to buy in India.
Gujarat Industries Power
This is another company like Chennai Petroleum 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 2017-18. The EPS of the company has moved to Rs 15.16 from Rs 12.45. Now, at the current market price of Rs 102, the stock is available at a trailing p/e of just 6 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.
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