Synopsis:
Adani Enterprises, Asian Paints, Trent, Varun Beverages, and Pidilite Industries these companies that have a proven track record of strong returns, solid business models, and market leadership in their sectors. With current P/E ratios below their 5-year median levels, they may offer value for patient investors
Some fundamentally strong companies with solid financials and proven track records are now trading below their historical valuation multiples. This means investors can access quality businesses at prices lower than what the market has typically paid in the past. Such situations are rare, as strong fundamentals usually command a premium.
1. Adani Enterprises
Adani Enterprises Ltd is a diversified conglomerate in several sectors, including green energy, data centers, airports, roads, mining, copper, and defense. Other business lines include airport retail, defense equipment, agriculture sourcing claims, industrial wastewater treatment, and media operations, promoting themselves as one of the key players in India’s infrastructure and new-age sectors.
The stock is currently trading at an attractive P/E multiple of 82.1x, below its 5-Year Median P/E of 101.1x. It has delivered a poor ROE and ROCE of 9.82 percent and 9.45 percent respectively.
2. Asian Paints
Asian Paints is one of the largest decorative paint organizations in India, offering a reasonably wide range of paints, coatings, waterproofing, adhesives, and home décor. It has continued to develop its service offerings into more full-service offerings, like painting solutions, for instance.
The stock is currently trading at an attractive P/E multiple of 62.4x, below its 5-Year Median P/E of 71.6x. It has delivered a robust ROE and ROCE of 20.59 percent and 25.72 percent respectively.
3. Trent
Trent Limited, part of the Tata Group, runs popular retail formats like Westside, Zudio, Star, and Landmark all over India. The company is all about fashion, lifestyle, and grocery, making sure to meet the varied needs of its customers. With a reputation for offering stylish yet affordable products, Trent has been on a fast track of growth, expanding through both its own stores and franchises.
The stock is currently trading at an attractive P/E multiple of 108x, much below its 5-Year Median P/E of 161.1x. It has delivered an ROE and ROCE of 30.40 percent and 30.71 percent respectively.
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4. Pidilite Industries
Pidilite Industries produces and exports chemicals. The products of the company are adhesives, sealants, construction chemicals, and art & craft materials for the consumer segment, besides industrial chemicals for various industries.
Some of the popular brands are Fevicol, M-Seal, Dr. Fixit, Fevikwik, and Araldite. The company offers its products and services to the general public, professionals, and enterprises in diverse fields.
The stock is currently trading at an attractive P/E multiple of 70.9x, much below its 5-Year Median P/E of 90x. It has delivered a robust ROE and ROCE of 23.05 percent and 29.84 percent respectively.
5. Varun Beverages
Varun Beverages Limited is one of the largest bottlers for PepsiCo, and oversees several different products in its portfolio, such as soft drinks (Pepsi, 7UP, Mountain Dew), juices (Tropicana, Slice), water (Aquafina), and snacks (Lay’s, Doritos, Kurkure), among others. Varun operates in India and overseas in international markets such as Sri Lanka, Nepal, and parts of Africa. Varun has a firm foundation.
The stock is currently trading at an attractive P/E multiple of 54.6x, below its 5-Year Median P/E of 64.2x. It has delivered a robust ROE and ROCE of 22.49 percent and 24.85 percent respectively.
In conclusion, these stocks are trading at prices lower than their historical valuations and have solid fundamentals, reliable business models, and strong positions in the market. This could be a great chance for long-term investors, but it’s crucial to take a close look at these businesses, understand the potential risks, and make sure they fit with your investment goals before jumping in to buy.
Written by Satyajeet Mukherjee
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