The Hindu Business Line : 37 BSE-500 stocks trade below book value

About 37 stocks from BSE 500 companies are trading at a discount to their book value. While Chennai Petroleum's stock price on June 12 was equal to its book value, the next 110 companies were available at a price to book value of between 1-2.

While as many as 80 companies are available between a P/BV of 2-3, 66 companies were trading at P/BV of 3-4, and 52 companies were available at P/BV of 4-5.

The 30-stock benchmark, BSE Sensex, on the other hand, is available at a much higher P/BV of 4.05 and 12-month PE multiple of 17.16 as on June 12.

Stocks available at lower price to book value along with low PE multiples are considered attractive buys, according to fundamental analysts. However, others contend that this is not the only criteria to determine if a stock is available cheap.

Along with the P/BV ratio, investors should also consider PE of a stock, its return on net worth, return on capital employed and various other parameters to decide on its intrinsic value.

Stocks such as MTNL, HPCL, OBC, SCI, Bank of Baroda, Arvind Mills and recently listed companies such as GVK Power Infrastructure, and Visa Steel are all available at a steep discount to their book value.

However, these companies have a 12-month trailing PE multiples of 1-90, with ING Vysya Bank figuring as the most expensive company in this list. Nevertheless, most are trading tantalisingly close to their 52-week lows.

There are as many as 10 companies trading at a P/BV of more than 10. Interestingly, despite a sharp market correction, construction company Unitech has a P/BV of 70. It was quoting at a PE of 302.5 on June 12. Other companies with very high P/BV include Godrej Consumer (44.88), Financial Technologies (41), Peninsula Land (26.47), Nestle India (25.59), Phoenix Mills (25.05) and Taneja Aerospace (22.23) to name just a few