An undervalued stock is one trading below its estimated intrinsic value—as determined through fundamental analysis using metrics like P/E ratio, P/B ratio, or discounted cash flow models. Undervaluation can result from temporary negative news, market-wide sell-offs, or neglect of a company operating in an unfashionable sector. Value investors actively seek out undervalued stocks, believing the market will eventually recognise the gap between price and value and correct upward. In India, segments like public sector banks, commodity producers, and traditional manufacturing have at various times offered compelling undervalued opportunities for patient long-term investors.
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