When markets rise, some stocks can move ahead of their fundamentals, while others take longer to get noticed.
This can create a gap between a company’s market value and what its earnings, assets and growth prospects may suggest. Undervaluation sometimes coincides with temporary financial underperformance, a business transition or near-term concerns that weigh on investor sentiment. As these factors play out, a gap can emerge between the stock’s current valuation and the business’s longer-term earnings potential. The key is to find out how the business is positioned for the next phase of growth. In this editorial, we look at five undervalued stocks.
#1 Raymond Lifestyle
First on the list is Raymond Lifestyle, the flagship company of the Raymond Group. It offers fashion products and services with branded textile and apparel brands across formal, casual, and ethnic wear. As of June, 2026, the total store count stood at 1,627. Its flagship brand, The Raymond Shop (TRS), has a network of 1,109 stores across more than 600 cities and towns. At the current share price of Rs 680, Raymond trades at around 0.4 times its book value of Rs 1,582 per share. The company has also maintained a structurally debt-free balance sheet with a net cash surplus of Rs 1,540 million (m) as of June 2026. This can be attributed to the company’s weak financial condition in FY25, followed by a modest recovery in FY26.
Total income surged 11% YoY to Rs 70.3 bn in FY26. Revenue growth was supported by branded textiles (+14%), branded apparel (14%), high-value cotton shirting (+2%), and garmenting (flat). EBITDA grew by 23% to Rs 8 bn, lifting the margin to 11.4%. Net profit grew 21% to Rs 1,750 m. The company also became net-debt-free with a net cash surplus of Rs 1.8 bn. Looking ahead, management aims to at least double company turnover within 3 to 5 years, with EBITDA projected to grow faster than revenue. Management states FY27 as a year of consolidation. It plans to optimize costs and restore sustainable profitability. Rather than aggressive expansion, it will focus on profit through a lean, high-performing store network. It targets a net addition of 30-40 stores in FY27. Further, it is shifting the product mix toward high-value Wool and Linen across all segments. This could support margins. It is also moving the product mix toward smart casuals, polos, chinos, and denim.
At the same time, it is exiting the Sleepwear category to reallocate resources towards high-growth brands.
Raymond is betting big on its ethnic wear brand, Ethnix, which currently operates 137 stores. The business is scaling. It aims to become a Rs 5+ bn brand over the medium term. The company is also expected to benefit from the India-UK and India-EU FTAs. The garmenting business was weak in FY26 due to US tariff-related uncertainty, but is witnessing a gradual recovery in orders. Now the outlook has improved a lot. As of Q1FY27, all five of its manufacturing plants have been 100% booked through December, with orders currently being taken for Q4 FY27 (January onwards). To support long-term demand, Raymond is adding about 1 m in annual production capacity. Raymond plans 5% to 7% apparel and 7% to 9% fabric price hikes from Q2FY27 to offset wool, cotton and flax inflation. Check out Raymond Lifestyle’s financial factsheet and quarterly results to know more.
#2 NTPC
Second on the list is NTPC. NTPC operates a diversified fleet of thermal (coal and gas), hydro, and renewable energy (solar and wind) power stations. NTPC accounts for 17% of India’s total installed capacity, generating 24% of the nation’s power supply. As of 30 June, 2026, NTPC Group’s operational capacity stands at 90.9 GW. Total group portfolio capacity, including under-construction assets, reaches 126.6 GW. Financially, consolidated revenue grew 7.8% year on year to Rs 507.4 bn. Operating profit grew 29% to Rs 162.3 bn with margins at 32%. Net profit surged 12.9% to Rs 68.9 bn. The company trades at a PE of 11.3, below both its 5-year historical median of 13.2 and the industry PE of 21. The stock offers a 2.7% dividend yield and generates high free cash flow. Management has guided for a strong future. NTPC has raised its capacity targets to 150 GW by FY32 and 250 GW by FY37. The share of fossil fuel-based capacity in NTPC’s portfolio is projected to decline from 82% to 56% by FY32 and to 39% by FY37. Clean energy share could go up to nearly 33% of generation by FY37, up from 4% today.
Operational Renewable Energy (RE) capacity stands at 12 GW. NTPC targets expanding its RE capacity to 60 GW by FY32 and 136 GW by FY37. Through NTPC Green Energy (NGEL), NTPC aims to add 7 GW to 8 GW of RE capacity in FY27. On the thermal fleet side, NTPC has 15.7 GW of coal-based capacity currently under construction. On the Nuclear Power side, through ASHVINI (a joint venture with NPCIL), NTPC is constructing the 2.8 GW (4×0.7 GW) PHWR Mahi Banswara Atomic Power Project in Rajasthan. NTPC formed NTPC Parmanu Urja Nigam to build and operate nuclear plants, targeting 30 GW of nuclear capacity by FY47 toward India’s 100 GW national nuclear goal. NTPC expects a 2-year capex of Rs 1 tn for FY27 and envisages a total long-term capital deployment of Rs 16.9 tn through FY37. The company is also investing Rs 1 tn to produce green ammonia, green methanol, sustainable aviation fuel (SAF), and green urea. NTPC is also venturing into coal gasification to supply gas-based power stations during peak demand periods. Check out NTPC’s financial factsheet and quarterly results to know more.
#3 Central Bank of India
Third on the list is Central Bank of India. The Central Bank of India operates a network of 4,585 branches, 3,819 ATMs, and 13,685 BC Outlets. The bank has a heavy rural focus, with 65% of its branches located in Rural and Semi-Urban (RUSU) areas. The company’s price-to-book (PB) ratio stands at 0.69, which is lower than the public sector bank median PB of 0.96 and peers like SBI (1.46), Union Bank (0.99) and Punjab National Bank (0.86).
In FY26, the Central Bank of India delivered a highly robust financial performance. Yet, the bank trades at one of the lowest valuations in the banking sector. The bank’s total business expanded by 15.6% year-on-year to Rs 8.12 tn, while gross advances rose by 18.76% to Rs 3.44 tn. This credit expansion was primarily driven by a 21% increase in the RAM sector. It currently accounts for 68% of the bank’s total credit book. Management aims to maintain a targeted RAM-to-Corporate loan mix of roughly 65:35 in FY27. Specifically, retail advances surged 25.67% to Rs 1.03 tn and the gold loan book grew 8.6% to Rs 280 bn. Management focused on deposit mobilisation, with total deposits increasing by 13.38% to Rs 4.67 tn.
Savings bank deposits grew by 10.05% and crossed the Rs 2 tn mark for the first time. The bank maintains an industry-leading CASA ratio of 47.3%. As advances grew faster than deposits, the credit-deposit ratio rose significantly to 73.8% from 66% in September 2025. The bank’s income and profitability metrics showed steady progress. Net Interest Income (NII) grew 1.97% year-on-year to Rs 141.7 bn in FY26, with NIM at 3.07%. Operating profit grew 4.37% to Rs 84.79 bn. Consequently, net profit surged 15.43% to Rs 43.69 bn. Return on Assets (ROA) improved to 0.89%. Return on Equity (ROE) also strengthened to 13%. Asset quality improved considerably due to better monitoring and technology integration. The GNPA improved by 51 bps to 2.67% while NNPA dropped by 6 bps to a mere 0.49%. The Provision Coverage Ratio remained robust at around 96%. Further, the bank successfully recovered Rs 22.7 bn from technically written-off accounts during FY26. Looking ahead to FY27, the bank has guided for credit growth of 14% to 16%, deposit growth of 10% to 12% and NIM of above 3%. Check out the Central Bank’s financial factsheet and quarterly results to know more.
#4 JM Financial
Fourth on the list is JM Financial. JM Financial is a diversified Indian financial services group operating across five main business segments. JM Financial is one of the market leaders in the Investment Banking Segment. The firm holds a DRHP-filed IPO transaction pipeline of Rs 1,500 bn across 60 filed transactions. Wealth Management is the largest segment by revenue with Rs 14.03 bn (31.7%) in FY26, while net profit stood at Rs 1.32 bn (11.7%).
Private Markets generated revenue of Rs 12.98 bn (29.4%) and net profit of Rs 5.52 bn (49.1%), making it the largest contributor to overall profitability. Corporate Advisory and Capital Markets revenue stood at Rs 9.46 bn (21.4%), while net profit came in at Rs 3.47 bn (30.9%). Affordable Home Loans contributed revenue of Rs 4.55 bn (10.3%) and net profit of Rs 0.76 bn (6.8%). Asset Management generated revenue of Rs 0.56 bn (1.3%), while the segment recorded a net loss of Rs 0.5 bn. The company reported revenue of Rs 42.2 bn in FY26 and net profit of Rs 12 bn. The group holds Rs 30 bn in cash sitting on the balance sheet. The firm plans to continue distributing capital to shareholders up to a maximum payout ratio of 50%.
However, its valuation is relatively low. JM Financial trades at a PB of 1.15, which is slightly lower than the 10-year median of 1.2. However, it is significantly undervalued compared to its closest competitor, Edelweiss Financial Services, at 2.8. The company shrank its real estate lending book by more than 60% from a high of Rs 100 bn, which directly impacted its financial growth. The company also reduced its non-core portfolio (MSME and other loans) to Rs 1.9 bn as of Q1FY27. Management expects this remaining book to substantially unwind over the next 12 months. By winding down the non-core book alongside the legacy wholesale real estate loan book,
JM Financial is refocusing on Bespoke Credit (corporate credit and loans against shares) and Affordable Home Loan. Bespoke Credit lending is targeted to grow at 15% to 20% annually, expanding standard loans from Rs 40 bn to Rs 70 to 80 bn over three years. At the same time, the company plans to scale profitable wealth revenues, achieve operating leverage in Asset Management and ramp up loan syndication income.
The company aims to drive consolidated ROE into the mid-to-high teens (15%+) over time. Looking ahead, the company expanded its wealth team by hiring 100+ Relationship Managers over the prior 18 months. Management has now shifted focus to driving RMs’ productivity, targeting profitability for new cohorts within 12 to 18 months. The company also aims to expand the share of recurring AUM within the Wealth Management segment, which now represents 29.6% of total Wealth Management AUM (Rs 1126.4 bn). Management plans to evaluate a public listing for the Affordable Housing business in 2 to 3 years. This could unlock value for shareholders. The company manages an AUM of Rs 132.1 bn in mutual funds. Full-year FY26 net revenue stood at Rs 560 m, and the business recorded a net loss of Rs 300 m as it continues to scale. The goal is to grow the AUM from Rs 105 bn to Rs 250 bn. Management expects to reach operating scale and breakeven within 2 years.
Check out JM Financial’s 5-year factsheet and quarterly results to learn more.
#5 ITC
Fifth on the list is ITC. ITC is India’s leading cigarette company with a presence across multiple business segments: FMCG, Paperboards, Paper & Packaging, Agri Business, and Information Technology. The cigarettes business remained the company’s largest segment, generating revenue of Rs 371 bn in FY26, while segment profit (PBT) stood at Rs 210.5 bn. ITC’s valuation has come under pressure following the sharp increase in cigarette taxes from February 2026. The company currently trades at a PE of 17, which is lower than the 10-year median PE of 25.
This valuation is also lower than FMCG peers like HUL (41.4) and cigarette peer Godfrey Phillips (22.5). GST increased from 28% to 40%, while higher excise duties raised the tax burden on cigarettes, creating concerns around pricing, volumes, and near-term earnings. Historically, after such tax hikes, the business has adjusted through price increases and premiumization over the longer term. ITC still remains a fundamentally strong business and generates over Rs 100 bn in free cash every year. The FMCG business continued to deliver healthy growth, with revenue rising 10.1% to Rs 242.1 bn and segment PBT increasing 14.1% to Rs 18 bn. As a result, total revenue grew by 10.1% to Rs 808.7 bn, while EBITDA surged by 4.9% to Rs 252.1 bn with margins at 31.1%. Net profit remained largely unchanged at Rs 202.9 bn. ITC paid a dividend of Rs 14.5 per share for FY26, translating to a yield of 5.1%.
The company generated Rs 163.3 bn in free cash flow in FY26, supporting its ability to pay dividends consistently.
ITC’s long-term strategy is guided by “ITC Next”. ITC plans to continue scaling its FMCG portfolio by extending its 30+ trusted brands into value-added adjacencies. Examples include expanding Aashirvaad into Dairy, Ready-to-Eat products, and spices; Sunfeast into Dairy Beverages and cakes; Bingo into namkeens; and Savlon into sanitisers, wipes, and disinfectant sprays. ITC is scaling up its newly incubated Fresh Food Business, operating over 70 cloud kitchens across 5 cities under brands like ITC Master Chef Creations and Sansho. It’s also driving next-generation agriculture through ITCMAARS, a phygital ecosystem aiming to connect 1 crore farmers by 2030.
ITC continues to grow its portfolio through strategic acquisitions. Besides 24 Mantra Organic Foods, Ample Foods (Prasuma and Meatigo), and Mother Sparsh Baby Care, ITC recently acquired Yoga Bar (Sproutlife Foods) to strengthen its presence in the protein-rich snacks market.
Check out ITC’s financial factsheet and quarterly results to know more.
Conclusion
The five stocks discussed trade at relatively low valuations, but each has a different business backdrop.
Raymond and JM Financial are navigating business transitions, while NTPC and Central Bank continue to expand their core operations. Meanwhile, ITC combines a lower valuation with steady cash generation and diversified businesses. Instead of relying solely on hype, investors need to carefully analyze the company’s fundamentals,
including financial performance, corporate governance practices, and growth strategies.
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