Broader indices, not far from their 52-week lows, also reflect growing investor anxiety amid a series of negative developments.
After disappointing earnings in Q1 and Q2, market experts believe only a tepid recovery will be visible in Q3, with a rebound likely pushed to Q4. This suggests that market pressure could persist longer than anticipated.
However, these headwinds also present opportunities. Some fundamentally strong stocks have taken a hit, not due to company-specific issues but broader market dynamics. For investors with a long-term view, this could be a chance to pick up quality stocks at attractive prices.
With this in mind, let’s take a look at five stocks that have corrected sharply but could offer deep value for patient investors.
#1 ACC
ACC, India’s third-largest cement company, has a national presence with a capacity of 36 million tonnes (mt). Ambuja holds a 51% stake in ACC and together, they control 70 million mt, the second-largest capacity in India after UltraTech. These two companies account for 11% of the country’s cement industry capacities.
At a price to earnings (PE) ratio of 15.5, ACC’s stock trades at a discount compared to the industry average of 35.5 and its 5-year median PE of 23. Despite strong volume growth, ACC’s current valuation is under pressure due to weak cement prices and low profitability.
While the company has made strides in boosting trade sales and increasing premium cement volumes, its realization per ton has dropped and profitability remains a concern.
Operating margins have been squeezed by falling cement prices, which, even with cost-saving measures in place, continue to erode overall profitability.
Although improvements in fuel efficiency and green power consumption are helping reduce costs, ACC faces challenges in passing on these benefits through higher prices, given the current pricing pressures in the market.
Looking ahead, ACC’s growth will largely depend on the recovery of demand in the construction sector. However, industry growth expectations for FY25 remain conservative, with only 4-5% overall demand growth anticipated.
ACC’s long-term prospects will hinge on its ability to manage pricing effectively while capitalizing on strong volume growth.
The company is working on green energy initiatives and cost optimization efforts that could support a gradual recovery. Yet, to unlock sustainable growth, it must carefully navigate the challenges in the pricing environment over the coming years.
Coming to its financials, from 2020 to 2024, the company achieved a strong sales and net profit CAGR of 6.5% and 8.9%, respectively.
Over the past five years, it has consistently delivered decent return ratios, with an average return on equity of 11.7% and return on capital employed of 16.2%.
View Full Image
#2 PI Industries
PI Industries is a leading player in the agrochemical space, specializing in insecticides, fungicides, herbicides and speciality products.
With over five decades of experience, the company has built a strong presence both domestically and globally, operating in over 30 countries. Its vast distribution network includes 10,000 active dealers and more than 100,000 retailers across India.
The agrochemical company has seen impressive growth between 2020 and 2024, with sales more than doubling and net profit nearly tripling.
However, while its returns have remained solid, with RoCE averaging 21.9% and RoE at 18.3%, the stock is trading at a PB ratio of 17.3, below the 5-year median of 19.
View Full Image
The stock is trading at 30x, a deep discount to its 5-year median average of 47x. PI Industries is currently facing challenges in its domestic agrochemical and pharma segments, with both sectors seeing revenue decline.
While the global custom synthesis and manufacturing (CSM) business continues to perform well, these struggles have led to a revised growth outlook.
The company has downgraded its FY25 revenue guidance from around 15% growth to a more conservative high single-digit growth, reflecting weaker demand and global market pressures. This cautious outlook has raised concerns among investors, especially in a growth-driven market.
Despite these short-term headwinds, PI Industries remains optimistic about its long-term prospects. The company is focused on expanding its CSM business with new molecule commercialization and product launches.
It is also targeting growth in its pharma API and Contract Development and Manufacturing Organization (CDMO) segments. If these initiatives succeed, PI could regain momentum, though the market remains cautious for now given the ongoing challenges.
#3 Hero MotoCorp
Hero MotoCorp leads India’s two-wheeler market, especially in rural and semi-urban areas, which account for 55% of total sales.
With over 5,000 distribution points, the company dominates these regions. Its success lies in offering affordable, fuel-efficient bikes, particularly in the 100cc to 110cc segment, catering to the needs of rural customers.
Currently, the stock is trading at a PE ratio of 20.6, significantly lower than the industry average of 48 and close to its 5-year median PE of 21. This discount reflects concerns around the company’s near-term profitability, particularly with challenges in the two-wheeler sector.
While Hero MotoCorp has posted strong volume growth, its operating margins have been squeezed due to increased investments in the electric vehicle (EV) space, which is still in the ramp-up phase.
Also, higher costs from new launches and rising raw material prices have pressured profitability, leading to a cautious market sentiment.
That said, Hero MotoCorp’s long-term outlook remains robust. The company’s focus on diversification, innovation and tapping into high-growth segments, particularly EVs through its Vida brand, positions it well for future growth in the green mobility space.
The EV segment has already gained traction in select cities and Hero’s commitment to continuous product innovation across key segments, strengthens its competitive edge.
Additionally, Hero’s strong international presence, especially in emerging markets, adds a promising dimension to its growth potential. While short-term pressures persist, Hero MotoCorp’s long-term prospects make it compelling for investors looking at future growth.
Between 2020-2024, the company’s sales have grown at a CAGR of 2.4% while the net profit has grown at 1.8%. The returns have been good with the RoCE and RoE averaging at 26.2% and 20.2%, respectively.
View Full Image
#4 Petronet LNG
Petronet LNG is India’s leading LNG player, operating the country’s first LNG regasification terminal at Dahej, which currently has a capacity of 17.5 mtpa and will expand to 22.5mtpa by FY26.
The company also has a 5 mtpa terminal in Kochi and plans to add another 5 mtpa terminal in Eastern India, bringing its total capacity to 32.5 mtpa. Petronet’s earnings primarily come from the regas margin it charges, which increases by 5% annually.
The company has a strong track record, having completed the Dahej project under budget, securing favourable LNG contracts and managing risks effectively.
The stock is trading at a PE ratio of 12.7, below the industry PE of 17.7 and close to its 5-year median PE of 11.4.
Petronet LNG’s stock has been under pressure due to a mix of high LNG prices, regulatory uncertainties and rising competition. Spot LNG prices have remained elevated, making imports costlier and affecting demand from third-party customers.
The uncertainty around use-or-pay (UoP) charges has also weighed on sentiment, as recoverability of dues remains a concern. Meanwhile, new LNG terminal capacities coming up in India are intensifying competition, potentially impacting Petronet’s pricing power.
On the growth front, the Dahej terminal expansion to 22.5mmt has been delayed to June 2025, slightly pushing back volume growth expectations. While the Kochi terminal’s pipeline connectivity is a positive long-term factor, it will take time to reach meaningful utilization.
Coming to its financials, between 2020 and 2024, the business has shown steady growth, with a revenue and net profit CAGR of 6.5% and 9.6%, respectively.
The 5-year average RoE and RoCE at 24% and 33.2%, respectively, has been admirable.
View Full Image
#5 Power Finance Corp
PFC is a prominent player in India’s power financing landscape, focusing on providing loans for a wide range of power projects.
As a leading non-banking financial company (NBFC), it plays an essential role in financing power generation, transmission and distribution projects, with an emphasis on large-scale, government-backed initiatives.
The stock is trading at a price to book value (PB) ratio of 1.2, below the industry PB of 2.4.
PFC has been trading below the industry average due to subdued loan growth, as high repayments in the first half of the year offset fresh lending. Its cautious approach also plays a role, with nearly all infra sanctions going to government-backed entities and limited private sector exposure. The board’s decision to reject a Shapoorji Pallonji loan further reflects its conservative stance.
PFC’s asset quality is improving with recent resolutions reducing stressed assets, and more recoveries expected soon.
PFC’s expansion into thermal power financing supports medium-term growth, though the long-term outlook is uncertain amid India’s energy transition.
However, its strong foothold in renewables and infra financing remains a key advantage. While near-term concerns weigh on sentiment, stable asset quality and an 18% ROE keep the long-term story intact.
As far as financials go, PFC has done well between 2020-2024. Its interest income and net profit have grown at a CAGR of about 12% and 14.9%.
View Full Image
In India’s current energy transformation phase, PFC stands to benefit significantly from the robust capex push, especially in renewable energy expansion and infrastructure upgrades.
The company’s expertise in handling low-risk, state-guaranteed loans positions it as a key financier in the power sector. PFC is further strengthening its growth potential through strategic diversification into renewable energy and infrastructure financing.
With a solid track record in resolving stressed assets and transitioning to more stable, state-backed loans, PFC’s asset quality remains strong, which positions it well to capitalize on the rising demand for energy-related infrastructure.
Snapshot of value stocks on Equitymaster’s stock screener
So these are some of the value stocks in the current market. Apart from the above, here’s a comprehensive list on Equitymaster’s stock screener:
View Full Image
Conclusion
The year 2025 is unlikely to be a year to make easy money in the stock market.
Ever since this bull market began in 2020, most investors haven’t seen a significant correction. This year could be the year of that correction. At least, that’s what Dalal Street seems to be expecting.
If that turns out to be the case, then value investing will be the order of the day. Consequently, the stocks that we discussed above could present potential opportunities for value conscious investors.
However, it’s essential to conduct thorough research on their financials, corporate governance, growth prospects, and market conditions before making any investment decisions.
Happy Investing.
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
