Cheap stocks are companies whose shares trade at relatively low valuations despite having strong businesses, healthy balance sheets and long-term earnings potential. They may be overlooked because of near-term challenges or simply because investors have yet to give them the attention they deserve.
That said, identifying cheap stocks is not an exact science. Valuations are based on estimates and assumptions about future earnings growth, profit margins, interest rates, cash flows and the appropriate valuation multiple.
External factors, including government policy and wars, are also difficult to predict and can weigh on valuations.
For this list, we selected three large-cap stocks that appear relatively cheap compared with peers in the same industry. We compared their price-to-earnings (P/E) multiples with those of peers and also considered whether their return on capital employed (ROCE) and return on equity (ROE) were reasonably healthy.
Investors should consider other parameters as well.
This is not a stock recommendation.
ICICI Prudential Life
First on our list is ICICI Prudential Life, one of India's leading private life insurers. It is promoted by ICICI Bank and Prudential plc.
The company offers a diversified portfolio of protection, savings, annuity, pension and unit-linked insurance (ULIP) products. Its distribution network spans bank branches, agents, digital platforms and corporate partnerships.
How ICICI Prudential Life compares with peers in the life insurance space
Most large private-sector life insurers trade at P/E multiples well above ICICI Prudential Life, making the stock relatively cheap on this measure.
One reason is recent news that Prudential plc plans to reduce its stake below 10% as part of its acquisition of a 75% stake in Bharti Life Insurance. Under Indian insurance regulations, Prudential cannot hold significant stakes in multiple life insurance companies. The stake sale is therefore primarily a regulatory necessity rather than a reflection of ICICI Prudential Life's business performance.
The news triggered a sharp decline in the stock, compressing its P/E multiple.
However, the development does not point to any deterioration in the company's underlying business. ICICI Bank has reiterated that it will retain its majority stake and continue to support ICICI Prudential Life.
The stake sale is driven primarily by regulatory requirements arising from Prudential's Bharti Life acquisition—not concerns about ICICI Prudential Life's fundamentals.
On the financial front, the company reported value of new business (VNB) of ₹26.29 billion in FY26, up 10.9% year-on-year. The VNB margin rose to 24.7% from 22.8% in FY25. Net profit grew 34.6% year-on-year to ₹16 billion.
Management has said it remains committed to delivering sustainable VNB growth while balancing business growth, profitability, prudence and risk.
Axis Bank
One of India's largest private-sector banks, Axis Bank was established in 1993 as UTI Bank and renamed in 2007. It offers a wide range of financial services to retail, business and corporate customers.
How Axis Bank compares with peers in the banking space
Axis Bank trades at the lowest P/E multiple among the private-sector peers considered, making it relatively cheap on this measure.
The bank's total advances grew 6% quarter-on-quarter and 19% year-on-year. Wholesale advances grew 38% year-on-year, SME advances 24% and retail advances 8%.
Gross non-performing assets stood at 1.23%, down 17 basis points quarter-on-quarter and 5 basis points year-on-year. Net credit cost was 0.37%, down 13 basis points year-on-year and 39 basis points quarter-on-quarter.
Management said the bank remains watchful of ongoing uncertainties but is confident of growing in a disciplined and calibrated manner, faster than the industry.
It also said the bank continues to monitor the macroeconomic and geopolitical environment, inflation, liquidity and the cost of funds, along with their potential impact on the business.
Wipro
An Indian multinational technology company headquartered in Bengaluru, Wipro is one of India's leading IT services and consulting companies, offering digital transformation, cloud computing, artificial intelligence (AI), cybersecurity, engineering and business process services to clients worldwide.
How Wipro compares with peers in the IT space
One reason Wipro trades at a lower P/E multiple is that investors expect slower growth from the company than from some of its peers.
What stands out, however, is its dividend yield of 6.27%.
On the financial front, Wipro reported IT services revenue of $2.65 billion in Q4FY26, up 0.2% sequentially but down 0.2% year-on-year. Operating margin was 17.3%, a contraction of 30 basis points sequentially.
Fourth-quarter order bookings stood at $3.5 billion, up 3.2% sequentially but down 13.9% year-on-year. The company closed 14 large deals worth a total of $1.4 billion during the quarter.
As AI becomes increasingly industrialised and widely accessible, Wipro is making a strategic pivot to stay ahead. It has launched a dedicated AI-native business and platforms unit, seeking to move beyond a services-only model towards a services-as-a-software approach.
The unit will have dedicated leadership, focused investments and a distinct operating model to accelerate the development of enterprise-grade agentic AI solutions.
Should you consider stocks that look cheap?
Before investing in a stock that appears cheap, investors should conduct their own research. This includes studying the company's financials, growth prospects, debt levels, management quality, competitive position and industry outlook.
A low valuation alone does not guarantee attractive returns. In some cases, the discount may reflect genuine business risks.
Investors should therefore evaluate a company's fundamentals, corporate governance and valuation together as part of their due diligence before making an investment decision.
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 fromEquitymaster.com