Revelation of Rajesh Exports and two other stocks likely trading below their fair value on the Indian stock exchange

Despite a stagnant performance last week, the Indian market has shown remarkable growth: it rose 45% last year and earnings are expected to grow 16% annually. In such a thriving environment, identifying stocks trading below their fair value could provide opportunities for informed investment decisions.

Top 10 undervalued stocks in India based on cash flows

Click here to see the full list of 20 stocks from our Undervalued Indian Stocks Based on Cash Flows screener.

Below we present a selection of stocks that our filter has filtered out.

Overview: Rajesh Exports Limited is primarily engaged in refining, manufacturing and wholesaling and retailing of gold and diamond jewellery and various gold products in India and has a market capitalization of approximately Rs. 92.93 billion.

Operations: The company’s total turnover from gold products is approximately ₹280.92 billion.

Estimated discount to fair value: 38%

Rajesh Exports is trading at ₹314.75, 38% below its estimated fair value of ₹507.64, indicating significant undervaluation on a cash flow basis. Despite a modest decline in profit margin from 0.4% to 0.1%, the company’s earnings are expected to grow at 31.7% annually over the next three years, outperforming the Indian market growth rate of 15.8%. The forecast revenue growth of 14.1% annually, while robust, does not cross the high threshold of 20%.

Overview: Texmaco Rail & Engineering Limited is an India-based domestic and international engineering and infrastructure company with a market capitalization of approximately Rs. 1,135 crore.

Operations: The company generates revenues from three main segments: freight wagon division at Rs 2750 crore, electrical infrastructure at Rs 2260 crore and rail and green energy infrastructure at Rs 5270 crore.

The story goes on

Estimated discount to fair value: 14.2%

Texmaco Rail & Engineering trades at a current price of ₹284.12, 14.2% below its fair value of ₹331.24, reflecting potential undervaluation in terms of cash flow. Despite a forecast low return on equity of 9.4%, the company’s earnings are expected to grow at 28.9% annually over the next three years, outperforming the Indian market growth rate of 15.8%. However, revenue growth projections are at 14.2% annually, falling short of a higher industry benchmark of 20%. Moreover, the recently approved dividend indicates positive financial health and increasing shareholder value.

Overview: Updater Services Limited operates an integrated business services platform in India with a market capitalization of approximately Rs. 21,050 crore.

Operations: The company generates its revenue primarily from two segments: Business Support Services at ₹8.09 billion and Integrated Facility Management Services at ₹16.74 billion.

Estimated discount to fair value: 41.7%

Updater Services Limited is significantly undervalued at ₹314.35 based on cash flow analysis with an estimated fair value of ₹538.92. The company’s earnings are expected to grow at a CAGR of 34.45%, outperforming the Indian market at 15.8%. Despite recent regulatory challenges and penalties totaling INR 4,469,143,930 after adjustments, these are not expected to have a material impact on financials as legal resolutions are being pursued. This positions Updater Services favorably for potential growth relative to its industry peers.

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This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They are not a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

Companies discussed in this article include NSEI:RAJESHEXPO, NSEI:TEXRAIL and NSEI:UDS.

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