2 ‘Cheapest’ Nifty 50 Stocks for the Bulls!

Market corrections are opportunities to add some of the high-quality companies to a long-term portfolio. To search for robust businesses, what’s a better place than the benchmark index which constitutes some of the largest companies in India! 

If you are willing to make the current dip to full use, here are 2 of the most undervalued companies from the Nifty 50 list, that should be on your radar. For the valuation, here I have selected companies that have a P/B ratio of less than 1 and there are only 2 such companies.

Oil and Natural Gas Corporation Limited

The first one on the list is Oil And Natural Gas Corporation Ltd (NS:), which is a global energy company engaged in the exploration of oil and and has a market capitalization of INR 1,80,527 crores. This is the cheapest company in the benchmark index, with a P/B ratio of a mere 0.64, compared to the sector’s average of 1.49 and index average of 3.55. 

In fact, if looking at a valuation from the FY22 earnings perspective, even then this company is the second-cheaped in the index, with a P/E ratio of 3.97. Not just that, the dividend yield of 7.32% also makes it the second highest dividend-paying company from the Nifty 50 list and eye candy for dividend lovers. The stock is currently trading at INR 142.25 and has very strong support around INR 120.

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Grasim Industries Limited

The second Nifty 50 company trading at less than its book value is Grasim Industries Ltd (NS:) which is a holding company having many verticals such as cement manufacturing, textile, chemicals, etc. with a market capitalization of INR 1,13,839 crores. The company is trading at a P/B ratio of 0.98 and clocked a record-high revenue of INR 97,418.54 crores in FY22, up 25.09% from the previous year.

The company’s market share has also grown from 21.8% to 37.8% in 5 years, which has also been reflected in the profit figures, with the FY22 net income rising 75.3% YoY to INR 7,549.78 crores. Currently, the stock is trading at INR 1,744.85 and has a strong support of around INR 1,630. Although the company pays regular dividends, the yield is not lucrative, which is at 0.58%.

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