In this article I will discuss about companies which have profit for last year less than the market cap of the companies. This sounds interesting but is true. It looks like they have value in them but before making any investment decision one needs to analyze the companies to ensure there is no value trap like one time profit in the year or pledged shares.Since you need to consider these points before making any investment decision in these companies.
The effort of this article is to present you list of such companies so that you can explore them further and understand if they can be part of your portfolio or track list. The companies are not mentioned in any particular order of preference. They are mentioned in order of market cap. As mentioned you can analyze them further to get more insight about the reason why they are under valued to that extent.
This also presents one interesting concept of value trap or value find. If profit is greater than market cap of the company it means there is definite value in the company. Based on this many people simply invest in the stock. But you need to understand why it is trading at steep discount. There may be multiple reasons of that like Shares pledged, One time income and debt trap. You need to figure these reasons out before deciding that it is value find.
Forbes and Company limited
You might have heard the Aqua Guard water purifier brand or may have one in your home. This is the company behind it and it is in news for all reasons like Shares pledged and transfer of shares to Advent. So you need to consider those points before valuing this stock.
- Market Cap – 826 Cr
- Profit last year – 4571 Cr
Jindal Photo limited
The company provides management consultancy and acts as a holding company. Holding companies always trade at a discount.It has book value of close to 2,000 (precise is 1842) and the current market price is 304 offering steep discount in that terms as well. All the profit reported below is due to other income reported by the company which is one time affair.
- Market Cap – 312 Cr
- Profit last year – 633 Cr
This company is in portfolio of Mukul Agarwal the top investor of India. The Company is in business of providing services to power plants and airports mainly. It is currently penny stock considering the stock price of the company (it is well below 5 INR as of this writing).
- Market Cap – 475 Cr
- Profit last year – 2144 Cr
Jindal poly investment and finance
You can think of it as holding company. The company has subsidiary company named Jindal India powertech limited. It is undervalued in terms of book value and stock price as well. The book value is around 2,400 and stock price is around 430.
- Market Cap – 451 Cr
- Profit last year – 599 Cr
Suumaya Industries limited
The company is in business of Women apparel. The flagship product or main product from the company is Kurtis. It is trading at steep discount with book value being 238 and current market price is around 30 INR. It is interesting company as profit does not have any other income. The debt level is huge considering the market cap of the company.
- Market Cap – 178 Cr
- Profit last year – 873 Cr
Available Finance Limited
It is non banking financial company. It is subsidiary company of Archana coal private limited. It is one more undervalued stock with book value being 839 and current price being 136 offering steep book value to trading price ratio. The promoter holding have increased in last one year or so. But small finance companies are very tough to analyze and conclude.
- Market Cap – 138 Cr
- Profit last year – 208 Cr