Indian stocks began May 2025 on a volatile note amidst geopolitical tensions. As the broader market rebounds, some undervalued stocks below ₹100 become perfect buys for huge returns in coming months. This article identifies three fundamentally sound low-cost stocks to buy and three that should be avoided or sold on account of poor performance or risk. A data-driven investor's guide to navigating the current market downturn.
May 2025 has opened with extreme turbulence for Indian share markets. The Nifty 50 has declined 1.1% following India-Pakistan tensions and other macroeconomic uncertainties. Though smallcap and midcap indexes seem overpriced, some penny stocks are still priced under ₹100. Let’s explore three top stock picks under ₹100 and three that one should sell or avoid considering their Q4FY25 performance and present fundamentals.
Here are the best undervalued stocks to buy:
Q4FY25 Net Profit: ₹1,050 crore (up 28% YoY)
Gross NPA Ratio: 4.2% (better than 5.1% YoY)
Why Buy: Central Bank of India is demonstrating a solid turnaround. Strong quarterly profits and better asset quality suggest management execution is improving. As PSU banks benefit from sector-wide recovery and reforms, CBI stands out for its steady credit growth and scope for re-rating. For value investors seeking PSU exposure, CBI is a compelling play under ₹100.
Q4FY25 Revenue: ₹28,500 crore (10% YoY growth)
Net Profit: ₹2,120 crore (18% YoY growth)
Why Buy: SAIL’s definite operational improvement, backed by improved steel prices and effective cost control, shows its strength. Government infrastructure expenditure and increasing domestic steel demand are positive for SAIL's outlook. Its low valuation and strong finances make it a quality pick for long-term investors, placing their bets on India's infra boom.
Q4FY25 Revenue: ₹1,920 crore (16% YoY growth)
PAT: ₹320 crore (22% YoY growth)
Why Buy: Suzlon is riding the clean energy wave in India. Its order book is strong and its balance sheet has improved remarkably over the past few quarters. Steady profitability and government backing for renewable energy means Suzlon has good long-term potential under trading price of ₹60.
Avoid buying or selling the following stocks to prevent losses in May 2025:
Q4FY25 Net Loss: ₹6,300 crore
Average Revenue Per User: ₹145
Why Sell: Vodafone Idea continues to burn cash, with persistent losses and no indication of a turnaround in ARPU (Average Revenue Per User). Elevated debt, outstanding dues, and poor funding visibility make it a speculative bet. Unless a drastic turnaround strategy is implemented, this telecom stock can be left alone.
Q4FY25 Net Profit: ₹210 crore (15% YoY decrease)
Average Revenue Per User: ₹132
Why Sell: Yes Bank has been recovering only slowly from its recent woes. High NPAs, narrowing profits, and minimal improvement in core banking processes indicate deeper-rooted structural weaknesses. Growth doesn't pick up despite recapitalizations. Risk-averse investors can avoid it for the time being.
Q4FY25 Revenue: ₹2,150 crore (unchanged YoY)
Average Revenue Per User: ₹94
Why Sell: NHPC is burdened by poor project implementation and regulatory lags. The stock has underperformed despite a general market rise. In the absence of new growth drivers or capacity additions, near-term appreciation is limited.
Follow the below investing tips to stay ahead of the market curve in May 2025:
Valuation Check: Small and midcap indices are trading at a premium to long-term averages. Caution is advised while bottom-fishing in overheated segments.
Volatility Alert: Worldwide uncertainty and India-Pakistan war has increased market volatility. Nifty 50 and Sensex both fell over 1% recently, thus, diversifying your portfolio may be the best bet in May 2025.
Sectoral Rotation: Choose the right sector to invest in. Banking and infrastructure stocks are witnessing strength, while telecom and utilities are experiencing structural and regulatory challenges.
In volatile market periods such as May 2025, picking the right stock is crucial to ride out extreme price swings. Investors must look at fundamentally strong names such as the Central Bank of India, SAIL, and Suzlon, which are supported by profit growth and sectoral improvement. On the other hand, struggling players such as Vodafone Idea, Yes Bank, and NHPC can weigh on portfolios and should be avoided. Investors should always look at quarterly numbers and macro trends before making any investment decisions.