Book value is simply the difference between the total assets and liabilities of a company on its balance sheet. Many investors use price to book ratio which compares the market capitalization of a firm to its book value to identify undervalued stocks. The lower this ratio the better the value proposition.
This is one of the widely used valuation metrics in the investing world. Let’s see which stocks from the benchmark Nifty 50 index are currently trading at the lowest P/B ratio.
Oil and Natural Gas Corporation Limited
Oil And Natural Gas Corporation Ltd (NS: ONGC ) is the largest crude oil and natural gas company in India, having a market capitalization of INR 2,41,352 crore. It has also received the Maharatna status from the government. Rising oil prices directly benefit the company’s profitability and therefore its stock is trading at a 52-week high, all thanks to increasing oil prices.
In FY23, the company posted a record revenue of INR 6,41,531.26 crore, over which it was able to secure a profit of INR 35,440.45 crore. Currently, it is the cheapest Nifty 50 company with a P/B ratio of a mere 0.8.
Grasim Industries Limited
Grasim Industries Ltd (NS: GRAS ) is a holding company with several businesses under its umbrella such as textile, chemicals, cement, etc. and has a market capitalization of INR 1,27,513 crore. The company’s net debt to EBITDA increased to 1.11x in Q1 FY24 due to investments in new businesses, however, the debt to equity is at a healthy level of 0.14x.
FIIs are also showing increasing interest in this counter and have ramped up their stake from 11.49% to 16.17% in one year ending June 2023. The sock trades at a P/B ratio of 1.04, making it the second-cheapest stock from the index.
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