Top 3 Stocks Under ₹100 to Watch Right Now
Investors often search for affordable stocks with the potential for significant returns. Today, we look at three stocks currently trading below ₹100. These stocks might just be your next big investment.
Ujjivan Small Finance Bank (USFB)
Current Price: ₹43
Why It's Worth a Look:
The stock has declined by nearly 30% in the past year, which can be an opportunity when others are fearful.
Ace investor Dolly Khanna bought a 1.07% stake in June, indicating confidence in the stock's potential.
Key Reasons for the Drop:
Management Change: The CEO's early retirement in May led to market instability, but the new CEO, Sanjeev Nainal, has strong credentials, having served as the Deputy MD of SBI.
Merger Pains: The merger with Ujjivan Financial Services caused turbulence. However, this merger has completed, boosting the book value to ₹29.7 per share.
Growth Guidance: The company guided a 20% loan book growth for FY2025, down from 37% in FY2024. This cautious outlook made investors jittery, leading to the stock drop.
Why It Might Bounce Back:
The management's guidance has been conservative. If the actual growth surpasses 20%, there could be a positive market response.
The company's fundamentals are strong:
All-time high revenue and profitability.
Healthy net interest margin at 9.1%.
High return on assets (RoA) at 3.5%.
A focus on a balanced mix of secured and unsecured lending for the future may stabilize growth.
IRB Infrastructure Developers Limited (IRB)
Current Price: ₹67
Why It's Worth a Look:
The stock has surged by 164% in the past year.
Two major tailwinds are boosting its prospects.
Key Drivers for Growth:
Order Book: With an order book of ₹35,000 crores and plans to execute ₹8,000 crores in the next two years, revenue growth seems promising.
Government Projects: The government aims to complete 200,000 km of national highways by 2030, creating a massive opportunity.
Business Model Insights:
IRB operates through four models:
EPC (Engineering, Procurement, and Construction): Traditional model where the government contracts out road construction.
BOT (Build, Operate, Transfer): IRB builds and operates roads, collecting toll revenue for a period before transferring the asset to the government.
TOT (Toll, Operate, Transfer): IRB leases existing toll roads, pays the government upfront, and collects tolls over time.
HAM (Hybrid Annuity Model): A mix of EPC and BOT, sharing the financial burden and risk with the government.
Growth Prospects:
The company expects a 15% revenue growth in FY2025 and FY2026.
Although the current P/E ratio is high at 67, the strong order book and government infrastructure plans provide a robust growth outlook.
IDFC First Bank Limited
Current Price: ₹77
Why It's Worth a Look:
The stock has dropped by 23% from its peak of ₹99.
Recent preferential issues at ₹86.3 per share indicate confidence from major investors.
Key Points:
Upcoming Merger: The stock is set to merge with IDFC Limited. Post-merger, KPIs will change significantly, making this a transitional period.
Arbitrage Opportunity: Buying IDFC Limited shares instead of IDFC First Bank could yield a 3.74% arbitrage profit if you hold the shares until the merger.
Financial Strategy:
Investors holding 100 shares of IDFC Limited will receive 155 shares of IDFC First Bank. This swap ratio creates an arbitrage opportunity, allowing investors to buy shares at a lower effective price.
Conclusion
These stocks under ₹100 offer unique opportunities for investors willing to take calculated risks. Ujjivan Small Finance Bank shows promise despite recent setbacks. IRB Infrastructure stands to benefit from government projects and solid order books. IDFC First Bank's merger and arbitrage potential make it intriguing.
Remember, investing always involves risks. Carefully consider the information before making decisions. Let us know your thoughts in the comments below, and don't forget to subscribe for more insightful content!
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