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Stock To Buy: Undervalued Largecap Stock, With Zero Debt & Good Dividends
While the Sensex has once again climbed its way back to the 61,000 points levels, with most stocks especially from the heavyweight banking sector back near record levels, there are select stocks that may still have the potential to rally. Here is one such stock.
Bajaj Auto: Better on valuations as compared to other players
The shares of Bajaj Auto have recently fallen, making it a better stock to buy in terms of valuations. At the current market price of Rs 3400, the stock is available at a price to earnings multiple of 14 times. This compares to 22 times for the Nifty companies, most of which are trading at hefty premiums to long term averages.
The industry p/e itself is more than 32 times, which makes Bajaj Auto among the good stocks to buy.
Dividend yield of more than 4.1%
The stock of Bajaj Auto at the current market price fetches a dividend yield of more than 4.1%, which is not bad at all. The company also is cash rich and debt free, with cash in hand which is more than Rs 17,000 crores. With price to earnings for most Nifty stocks truly stretched there are very few companies that are available at price to earnings ratio of 14 times. Apart from this Bajaj Auto tends to declare dividends sometime in the month of July.
Rebound in the economy to augur well for Bajaj Auto
Bajaj Auto is one stock that could ride the economic recovery, which has been happening lately. We believe that the company would also do well on the exports front, which had been earlier hit due to the covid outbreak.
All in all, Bajaj Auto is a stock that is a good buy at the current levels, given zero debt, huge cash holdings and very reasonable price to earnings multiples.
The stock of Bajaj Auto was last trading at Rs 3434 on the BSE.
Disclaimer
Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Investing in equities is risky. The author and his family do now own any shares of Bajaj Auto.
