It was carnage across the board on Thursday after the rupee touched an all time low of 59.93. Fears of a large scale pullback of FIIs from India saw the Sensex crashing 526 points, lead by shares in the metal, banking and realty sectors.
Yet, periods of turmoil like these also provide investors with an opportunity to buy stocks at reasonable valuations. One of the yardsticks used by investors is the market price compared to the book value.
Book value is the net asset value of the company. Technically speaking, it is the sum of the company’s equity capital and reserves divided by number of shares in issue. Simply put, this is the price that a shareholder would get per share if the company were to be liquidated. The book value is a reasonable indicator of whether a stock is overpriced or undervalued.
As per latest data, 25 companies out of BSE 100 are trading at discount to book value post Thursday’s sell-off. Check them out
Source: Capitaline. Close price as on 20th June, 2013
|Company||Close Price||Cons Book Value||Latest P/BV|
|Bank of India||260.25||390.81||0.67|
|Bank of Baroda||576.6||785||0.73|
|Punjab Natl Bank||687.35||934.58||0.74|
|Power Fin Corp||154.4||183.01||0.84|