How to find undervalued stocks by calculating their real value

Imagine you're at a fruit stand. You see two baskets of apples that look exactly the same. One costs Rs. 50, and the other costs Rs. 100. You’d naturally buy the cheaper one.

Similarly, in the stock market, figuring out the "real" price isn't as easy. The price you see on the screen can change every second, but a company's true worth is more stable. The trick to smart investing is learning how to see this true worth.

Thankfully, you don't have to be a math whiz to do this. Online tools, like the valuation calculators on Finology Ticker, can help you focus on a company’s real value instead of getting lost in the confusing daily price changes.

What is Stock Value and Why Does it Matter?

Finding a stock's value, or valuation, is like doing a health check-up on a company to find out what it's really worth. The price of a stock can fluctuate based on news or market sentiment, but the company's actual value doesn't change that quickly.

Knowing a stock's actual value helps you:

• Find good deals: It helps you spot strong companies that are selling for less than they are worth.
• Avoid paying too much: It stops you from buying a stock for more than its real value just because everyone else is excited about it.
• Invest without stress: When you know what your stocks are truly worth, you won't feel the need to panic and sell them when the market has a bad day.

The Magic of Finding Stocks on Sale

A stock that is selling for less than its actual value is called undervalued. Finding these stocks is like finding a high-quality item on a discount rack. It gives you a better chance to make money and lowers your risk of losing it.

Think of it as having a "safety net." If you buy a stock for much less than it's worth, you have a cushion. Even if the company has a few bumps along the way, you are less likely to lose money because you bought it at such a good price. The goal is to buy these hidden gems and wait for others to realise their actual value, which should make the stock price go up.

How to Find a Stock's True Value

There are a few simple ways to estimate what a stock is worth without needing a finance degree. Even better, platforms like Finology Ticker have built-in calculators that make it easy for anyone.

Here are a few common methods:

• Book Value: This is what would be left for shareholders if a company sold everything it owns and paid off all its debts. If a stock is selling for less than its book value, it could be a bargain. Tools like the Book Value Calculator on Finology Ticker can instantly tell you if a stock is trading for less than its net assets.
• Earnings Multiple (P/E Ratio): This compares a company's stock price to the money it makes (its earnings). A low P/E ratio can be a sign that the stock is on sale compared to similar companies.
• Future Cash: This method tries to guess how much money a company will make in the future to figure out its value today. This sounds complicated, but a DCF Calculator, like the one on Finology Ticker, can do the math for you in just a few clicks.

Real-Life Examples from the Indian Market - ICICI Bank

ICICI Bank is one of the largest private sector banks in India. Its book value per share has grown significantly from Rs. 223.34 in March 2021 to Rs. 432.55 in March 2025, reflecting strong growth and capital accumulation.

With a Price-to-Book ratio of about 3.16, the bank's stock price fluctuates within a 52-week range of approximately Rs. 1,186 to Rs. 1,500.

Investors who recognised that the stock was trading at a more attractive valuation during market downturns made significant gains as the bank's fundamentals improved and the market reassessed its worth.

All you needed to do was head to Finology Ticker and enter your assumptions of its future book value and growth rate, as per your analysis. After that, enter your discount rate and get the Fair Value of any stock in seconds. No need to learn any formula or complex Excel.

Investing Is Easier Than You Think

Years ago, you needed to be an expert to figure out a stock's actual value. Now, technology makes it much easier. With all the information you need in one place and handy tools like the valuation calculators on Finology Ticker, anyone can make smarter investment decisions.

By focusing on a company's real value instead of just its daily price, you start investing like a pro. You become an owner of a business, not just a person guessing which way the market will go. So next time you see a stock, don't just look at the price. Ask: What is it truly worth? The answer to that question could be your key to a successful investment journey.

Finology is a SEBI-registered investment advisor firm with registration number: INA000012218.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.