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NEW DELHI: Nifty 50 is trading at record high levels, but 20 of its constituents are still ruling below their historical averages, suggesting value-buying opportunities in some counters.

Analysts’ targets suggest double-digit upside for many of the stocks. They included

, Coal India, , JSW Steel and NTPC, which are trading up to 64 per cent below their 10-year valuation average.

Despite an over 400 per cent rally from March 2020 low, Tata Steel trades at a single-digit PE of 5.3 times — a 64 per cent discount to its 10-year average PE multiple of 14.7. A total of 30 analysts have a median 12-month target of Rs 1,793 on the stock, suggesting 24 per cent potential upside over Friday’s levels.

At 5.4 times trailing twelve-month EPS, Coal India is trading at 56 per cent discount to its 10-year PE average of 12.3 times. This stock has a median 12-month target of Rs 174, based on 22 analyst projections. The target suggests up to 19 per cent potential upside.

ONGC, too, could be a strong value buy, as 20 of 26 analysts tracking the stock have buy ratings against just 3 sell calls. A median target of Rs 145 on the counter suggests an 18 per cent potential upside over Friday’s closing price of Rs 123.05. ONGC is available at 5 times its trailing 12-month EPS against a 10-year average of 9.4 times.

Source: Motilal Oswal Securities

In the case of JSW Steel, the scrip has 16 buy recommendations against 5 sell calls. A median target of Rs 790, based on 29 analyst calls, suggest a 14 per cent upside.This stock trades at 7.6 times, a 41 per cent discount to its 10-year average of 12.8 times.

The list is long. In the auto sector,

is trading at a 20 per cent discount, while Motors is trading at a 4 per cent discount to historical averages. The median target for Hero MotoCorp at Rs 2,801.25 by 42 analysts suggests a 13 per cent potential upside over Friday’s Rs 2,801.25. Eicher Motors’ median target by 40 analysts, however, is on a par with the prevailing market price of Rs 2,801.45.

In banking,

is trading at 1.5 times price-to-book value, compared with the historical long-term average of 2.7 times, suggesting a discount of 42 per cent. In the FMCG sector, ITC’s PE at 16.1 times is ruling at 37 per cent discount to 10-year average of 25.4 times.

IndusInd’s target price of Rs 1,180 suggests a 17 per cent upside, while ITC’s median target of Rs 250 suggests a 19 per cent upside.

Pharma names such as Sun Pharma, Dr Reddy’s Labs and Cipla, refiner IOC and utilities Power Grid and NTPC are also on the list.

Motilal Oswal Securities 2

Source: Motilal Oswal Securities

Meanwhile, a 10 per cent rally on Nifty 50 since August 1 has pushed valuations of stocks such as HCL Tech, , Tata Consumer, Divi’s Labs and up to 100 per cent above their long-term averages.

August saw largecap stocks reversing their underperformance as the Nifty 50 rallied 8.7 per cent for the month. In the three sessions to September, the index has added another 1 per cent, making analysts say the index could be in for some consolidation in the short term.

Value buys: Nifty@ fresh highs but 20 stocks trade below historical valuations

By ariox