Beaten down stocks are risky bets, but, in the past many of them have truly been multibaggers. Had you to invest in Satyam at the peak of the crisis, you would have made money several times over. There are so may examples, where stocks have crashed and bounced back - another example is Maruti, which saw its share price collapse when there was a crisis at its Menasar plant some years ago. The stock since then has given manifold returns. Here are a few stocks that have been heavily beaten down, but, do have sound business models.
Tata Motors
Exactly in Jan 2018, this stock was trading comfortably at levels of Rs 440 plus. Today, at Rs 185, the stock has lost heavy ground.
Except demand for the company's products in select markets, nothing has changed really at the company. It continues to invest in electric vehicles and new models. It owns the prestigious "Jaguar and Land Rover" models also known as JLR.
Demand in the coming years could improve. Interestingly, the domestic market is showing an uptick, whereas the global performance of the JLR has witnessed a slowdown. If you are willing to take the risk, this beaten down name, could fetch you glad tidings.
Yes Bank
This is another stock that has collapsed in the last one year from levels of Rs 400 plus to Rs 185. Here again there has been no fundamental change in the business. The reason for the fall has been the successorship worries at the bank, following the end of tenure for Rana Kapoor, the current CEO.
One of the other reasons for the fall in the shares is the fact that the bank was pulled up for under reporting of NPAs by the RBI.
Yes Bank continues to be a large sized bank (fourth largest private sector bank) and has reasonable ability to grow in the short to medium term. With NPAs likely to dwindle in the years to come, the bank could do well. It also has a strong brand equity.
If one is willing to take a bet for the long to medium term, the stock is not a bad bet. In fact, it is quoting under 10 times one year forward p/e and just 1.66 times price to book. Check stock quote of Yes Bank
Reliance Capital
This stock has dived from levels of Rs 600 to Rs 217. Now, we all know the problems that the ADAG group is facing with regards to loans taken by RCOM. This has impacted the shares of group companies like ADAG.
However, as an independent entity Reliance Capital holds good value, merely because it owns businesses like the insurance business and the asset management business. Interestingly, the dividend yield on the business itself is a decent 5 per cent. This stock can give you decent dividends and can protect your capital from a big fall.
Indiabulls Housing Finance
This stock again has almost halved from levels of Rs 1400 to Rs 815. What is interesting about this stock that it gives a huge dividend of Rs 44 per share, which translates into a dividend yield of more than 5 per cent. The IL&FS worries and the worries over the NBFC sector has hit the stock hard.
However, if you are a long term investor, the stock maybe a good bet at the current levels, merely for the dividend yield alone. The stock is also trading at a p/e of under 10 times, which makes the stock cheap on the valuations front.
Disclaimer
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.
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