Stocks To Buy: 10 Nifty Stocks Trading At Discount To Historical Averages

Despite the Nifty trading at hefty price to earnings multiples of more than 21 times, one year forward earnings, there are many stocks trading at a discount, here are 10 Nifty stocks that are available at a discount.

Stocks trading at a discount to historical averages

Name	P/E 10 year average	Current p/e	Discount
JSW Steel	12	7.5	-38%
India Oil	8.8	6.9	-21%
ONGC	8.9	3.4	-62%
NTPC	11.2	8.2	-27%
Coal India	12.1	5.9	-51%
UPL	12.3	12	-2%
Sun Pharma	29.4	23.8	-19%
Cipla	27.8	23.4	-16%
Tata Steel	12.8	5.9	-54%
Hindalco	9.2	8.7	-2%

Courtesy: Bulls and Bears Handbook, Motilal Oswal

Should you buy these stocks trading at a discount?

Each of these stocks would have to be evaluated on an individual basis. For the steel stocks, it is more of a solid robust demand and great pricing ability. For example, Tata Steel, which declared quarterly numbers, once again reported solid numbers as steep prices have moved significantly higher. In fact, the company reported an EPS of Rs 62 for the December 2021 quarter. If you annualize the same, the stock of trading at a p/e of just 5 times.

We believe that steel prices would continue to remain high for sometime, which should boost earnings for Tata Steel. As long as the global economy is doing well all of the steel stocks like Tata Steel and JSW Steel are likely to do well.

Pharma stocks: There is value left

Some of the pharma stocks listed above still have some value left. Some of them are facing margin pressures and higher costs, however, product pipelines remain robust and structurally nothing has changed.

In fact, some of them like Sun Pharma and Cipla are good stocks to buy for the long-term. Pharma can also be a good bet should the markets fall and global economic growth starts faltering. We believe that even other stocks like Aurobindo Pharma could offer good value to investors.

A word about the markets

There are worries that global interest rates would move higher and hence one needs to be cautious before investing lumpsum in the markets. Buy only into stocks that have a strong pedigree.

The forthcoming RBI policy meet on 9th Feb'22 will also be an important event to watch. Q3FY22 earnings has been good so far as companies largely delivered on the earnings front, despite the unprecedented inflationary pressures from rising commodity and energy prices. The corporate earnings delivery is highly crucial, in a rising rate regime which is getting well reflected in the market with poor performers getting battered severely. Buying into stocks with a good dividend paying track record would be ideal.

Disclaimer

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and his family do not hold shares of any of the companies listed above. Investors should exercise caution on account of heightened volatility in the markets currently.