These five stocks are proof that value investing is far from dead

Mint

02-05-2025

Some of the
best investment returns
in history haven't come from the obvious picks—but from companies that were overlooked, undervalued, or simply misunderstood at the time.
Spotting such opportunities early—before the rest of the market catches on—is what sets great investors apart.
Value investors aren't swayed by headlines. They focus on fundamentals: strong balance sheets, rising profitability, competent management, and long-term tailwinds. And crucially, they look for all this while the stock is still trading at a discount.
In this piece, we spotlight five such under-the-radar stocks that combine solid business performance with favourable sector dynamics.
Samvardhana Motherson International is one of the world's largest automotive component suppliers. The company caters to leading global OEMs across passenger vehicles, commercial vehicles, aerospace, logistics, and emerging electronics sectors.
It's clients include Mercedes-Benz, Volkswagen, Toyota, Airbus, and Honda.
In Q3 FY25, the company reported 8% year-on-year (YoY) growth in revenue to
₹
276 billion. The Ebitda grew 13%, while profit after tax rose 20%.
Despite global automotive production declining 1% YoY, it outgrew the market with 7.5% volume growth. Ebitda margins improved to 10%, on the back of operating efficiencies and a well-diversified business mix.
In 9MFY25, revenue grew 18% and PAT expanded 38%, indicating consistent performance despite macro challenges.
Looking ahead, the company is doubling down on its new growth engines—consumer electronics, aerospace components, and precision engineering.
Two greenfield plants went live in Q3 FY25, and six more are slated to become operational over the next two quarters.
To expand its global footprint, it's pursuing strategic acquisitions such as Atsumitec and forging partnerships with Japanese firms like Matsui.
Despite the momentum, the stock trades at a price-to-earnings (P/E) ratio of 23—well below its five-year median of 44.7.
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Ddev Plastiks Industries is one of India's largest polymer compound manufacturers, with a dominant presence in cable compounds. It holds an estimated 50% market share in Sioplas and around 33% in XLPE compounds.
With over four decades of expertise, five manufacturing facilities, and a diverse portfolio of 200+ SKUs, Ddev serves critical sectors including power transmission, infrastructure, and consumer durables.
Over the past few years, the company has consistently delivered healthy double-digit growth in revenue and operating profit, with earnings compounding faster than sales—a sign of improving operating leverage.
In the latest quarter, both revenue and net profit grew in the high teens, while margins stayed firm in the double digits, despite raw material cost fluctuations. Volume growth was driven by strong domestic demand, though exports were temporarily impacted by elevated freight costs.
Looking ahead, Ddev is ramping up capacity in high-margin segments such as halogen-free flame retardant (HFFR) and speciality polyethylene (PE) compounds. It has set an ambitious revenue target of
₹
5,000 crore (
₹
50 billion) by FY30—implying mid-teen annualised growth.
Importantly, the company maintains a
debt-free
balance sheet and is funding expansion through internal accruals, reinforcing its financial prudence.
Despite its solid fundamentals, the stock trades at a P/E of 14.4—below its five-year median of 15.5—offering potential value for long-term investors.
Jindal Drilling & Industries is one of India's key offshore drilling contractors, primarily serving the domestic oil and gas industry.
It has long-standing ties with clients like ONGC and operates five jack-up rigs—two of which are owned. The company is also in the final stages of acquiring a third rig, a move that will expand its owned fleet and support further margin gains. Alongside, it provides specialised services like directional drilling and mud logging to E&P companies.
After a period of challenges, the business has made a strong turnaround. In Q3 FY25, revenue surged nearly 40% sequentially, Ebitda more than doubled, and PAT jumped significantly—driven by the full-quarter contribution of its high-day-rate rig, Jindal Supreme.
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Operating margins improved to 34%, while PAT margins hit 20%, reflecting enhanced asset utilisation and favourable contracts.
Over the last three years, both Ebitda and PAT have compounded at strong double-digit rates.
Looking ahead, the company's
₹
1640 crore (
₹
16.4 billion) order book ensures visibility into FY28. The acquisition of a third rig and possible consolidation of currently leased rigs into owned assets could further improve cost efficiency and profitability.
All rigs are now operating at higher day rates under ONGC contracts, and the company has transitioned to a net cash position—providing financial headroom for future growth. ONGC's upcoming capex plans for Bombay High redevelopment further strengthen Jindal's growth runway.
Despite this momentum, the stock trades at a PE of 15.4—below its five-year median of 17.2—leaving room for re-rating.
Quess Corp is India's largest business services firm, spanning workforce solutions, IT services, and asset management. With over 2,000 clients and a 600,000-strong workforce, it serves a diverse set of industries including BFSI, telecom, IT, retail, and infrastructure.
In Q3 FY25, Quess delivered 14% YoY revenue growth with consolidated revenue at
₹
55 billion. PAT grew 34%, even after absorbing demerger-related expenses. However, margins came under pressure from seasonal bonus payouts and continued investments in leadership and tech platforms, with Ebitda margin at 3.6%.
Segment-wise, workforce management saw 18% revenue growth, global tech solutions 10%, and asset management 15%—pointing to broad-based momentum. Over 9MFY25, revenue and Ebitda grew 11% and 13% respectively, while PAT jumped 59%.
Looking forward, Quess's planned three-way demerger, set for completion by Q1 FY26, aims to unlock value across its verticals. It continues to invest in digital platforms like foundit and Qjobs, and is focusing on higher-margin businesses like IT staffing and industrial asset management.
Strong cash flows have allowed Quess to reduce gross debt to
₹
220 crore (
₹
2.2 billion) from
₹
370 crore (
₹
3.7 billion) earlier this year.
Despite the turnaround and structural changes underway, the stock trades at a PE of 13.5—a steep discount to its five-year median of 18—potentially offering long-term upside.
Indegene is a tech-driven healthcare solutions provider, serving some of the biggest names in the global biopharma, biotech, and medical device industries.
Its core offerings span commercial operations, medical affairs, omnichannel marketing, and regulatory services—helping life sciences clients modernize their processes and stay compliant in a rapidly evolving landscape.
With over 75 active clients, Indegene draws more than 60% of its revenue from the world's top 20 pharma companies—a testament to its entrenched relationships in the sector.
In Q3 FY25, the company posted a 7% YoY revenue growth, and a 4.9% sequential increase, reflecting deeper engagement across both large pharma and mid-sized biotech firms. Operating performance was solid—Ebitda margins expanded to 20.8%, backed by improved capacity utilization and automation. PAT margins stood at 15.2%, with net profit growing nearly 20% QoQ.
Looking ahead, Indegene is targeting broader client conversion—especially in the mid-tier pharma segment. It's also doubling down on global delivery expansion, with new investments in Spain and the UK, and ramping up its capabilities in automation and GenAI.
Armed with over
₹
1500 crore (
₹
15 billion) in cash, the company is actively scouting for capability-focused acquisitions, particularly in tech and regulatory areas. Management remains upbeat on long-term tailwinds, including pricing pressures, growing regulatory complexity, and the accelerating push for digital transformation in life sciences.
Despite its momentum and positioning, the stock currently trades at a PE of 35.8, which is a discount to its five-year median—potentially offering an entry opportunity.
In investing, patience often outweighs perfect timing. The real wealth is built by identifying solid businesses early and holding them as they scale and thrive.
The five companies highlighted here aren't speculative bets. They are grounded in strong financials, robust industry tailwinds, and credible leadership.
As these businesses continue to execute and grow, the market is likely to take notice. For investors willing to cut through the noise and stay the course, these underrated stocks have the potential to deliver meaningful long-term returns.
Of course, every investment decision should be guided by your personal goals, risk tolerance, and time horizon.
Always evaluate a company's fundamentals—its financial health, governance standards, and future growth potential—before making a move.
Happy investing!
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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from
Equitymaster.com