With the year 2023 coming to an end, you may be looking to amplify your investment approach with some well-timed muhurat trading. As such, investments that require low input but can give high returns must be on your radar as a trader. And what’s more invaluable than value stocks in our fast-progressing economy? So, if you’re on the lookout for the best value stocks in India right now – you’re reading the perfect article for you!
But, before we get into the top value stocks in India for 2023, let’s start by understanding what value stocks are, and why they can add considerable value to your trading portfolio!
What is a Value Stock?
A value stock is a company’s share that is being traded at an unrealized price – basically, at a discount. Such shares seem to hold a market price that is low in comparison to their actual growth seen in dividends, profits, etc. This is why these stocks are very attractive to experienced traders, who are always looking for new, unrealized stocks they can make a profit from. As for the term itself, “Value Investing” was coined as a phrase and a concept by Benjamin Graham, who is remembered in trading history as the Father of Value Investing, in his book “The Intelligent Investor”.
What is Value Investing?
It was Graham who derived the strategy of investing in value stocks, namely, concentrating on identifying and then buying undervalued stocks of companies with strong performances in the market. In other words, traders first perform precise fundamental research and analysis of stocks from quality companies that they think are yet undervalued then buy them.
This approach is usually applied for long-term investments, as traders buy value stocks and then hold them over a long period of time.
Why, you may ask? The reason is that investors strategize and cherry-pick those stocks that hold current market values much less than their intrinsic value. Essentially, investors see future growth potential in these well-performing companies, and therefore in the performance of their shares as well! So, they see this current stock as a low-price and high-return investment because its market price will eventually rise to its unrealized, intrinsic value. And it is during this rise that such foresighted investors accumulate sizable returns.
So, value investing is the process of identifying which stocks are undervalued at the moment, buying them at much lower prices, and holding on to them long-term – that is, until they give you high returns. In simple terms, value investing is an investment approach that seeks to profit from identifying undervalued stocks. It is based on the idea that each stock has an intrinsic value, i.e. what it is truly worth.
The 5 Best Value Stocks in India for 2023
| Sr.No. | Best Value Stocks in India | Industry | Stock Price (as of November 2023) |
| 1. | Coal India Ltd | Mining, Refinery | 334.45 INR |
| 2. | Tata Consultancy Services Ltd (TCS) | IT Services, Consulting, and Business Solutions | 3,509.95 INR |
| 3. | Colgate-Palmolive (India) Ltd | Consumer Goods | 2,182.30 INR |
| 4. | LTIMindtree Ltd. | Technology Consulting and Digital Solutions | 5,566.65 INR |
| 5. | Housing and Urban Development Corporation Ltd | Housing Finance, Infrastructure Project Finance | 82.93 INR |
Overview of the Best Value Stocks in India
1. Coal India
Coal India, involved in coal mining and refinery, has been one of the key players in enhancing the Indian economy.
Since its conception in 1975, the company has been high on the list for most share traders. This is because Coal India Ltd has repeatedly, across decades, delivered consistent performance and profitable returns, and so it holds a stable position in the market.
Market Cap: 2.14 trillion INR
1-year growth in stock price: 45.74%
2. Tata Consultancy Services Ltd (TCS)
Tata Consultancy Services Ltd has led IT services in India for a long time.
With over 50+ years in the industry, a robust market standing, and consistent high-revenue performance, TCS has remained a favourite with value stock investors.
Market Cap: 12.88 trillion INR
1-year growth in stock price: 45.74%
3. Colgate
Colgate-Palmolive, offering consumer products for oral care and personal hygiene, has shown continuous growth and consistent stability over the years.
Due to this reason, nine out of ten traders will likely invest in this company as a value stock.
Market Cap: 593.93 billion INR
1-year growth in stock price: 37.81%
4. LTIMindtree Ltd.
LTIMindtree, formerly known as Larsen & Toubro Infotech, is an India-based global technology consulting company and a strong competitor to Tata Consultancy Services (TCS).
With a 37.27 P/E ratio (price-to-earnings ratio, that is, a company’s stock price relative to its earnings per share), LTIMindtree far exceeds the sector P/E ratio which is approximately 28.05. So, investors are likely to invest in this company as a value stock.
Market Cap: 1.64 trillion INR
1-year growth in stock price: 16.93%
5. Housing and Urban Development Corporation Ltd
A techno‐financing company, Housing And Urban Development Corporation Limited (HUDCO) provides long-term finance for the construction of houses for residential purposes. They also undertake housing and urban development projects in India.
While the company might show short-term volatility now and then, it performs well across longer periods. For instance, in the past six years, HUDCO’s dividend has shown consistent growth – with its dividend rising by an average of 103% per year.
Market Cap: 162.65 billion INR
1-year growth in stock price: 71.66%
Factors to Consider Before Investing in Value Stocks
While we have listed out the best value stocks in India for the year 2023, it is important to do your own research on these and other stocks.
And here’s what you should look out for, while value investing in value stocks:
- Company’s History and Performance: The most basic and crucial factor to consider while selecting a value stock. Review the company’s revenue, dividends, sector position, and performance trajectories over the years. Do a quick check of its background and history.
- Financial Ratios: Ratios such as Price-to-earnings ratios and Price-to-sales ratios are critical for traders to weigh up the company’s performance and market position.
- Risk: Value stocks are lower on the risk scale when compared to growth stocks. Nevertheless, identifying the company and stock’s vulnerabilities and pain points is important. Once you know these, determine if the asset aligns with your unique risk appetite.
- Company’s Cash Flow: Any company’s free cash flow should be checked. Find out the actual cash flow including all expenses and capital by referring to the company’s net cash flow. This factor helps reveal the true stability and performance of a company’s stocks.
- Company’s Response to Market Volatility: Value stocks are usually long-term investments. And so, they can, indeed, be impacted by market conditions. It might help to reflect on how your chosen companies have handled recent situations of high volatility and turmoil – the most telling period here being the pandemic – before investing.