Value investing in India is a time-tested strategy for building wealth by buying undervalued stocks. Popularized by Warren Buffett, it focuses on companies trading below their intrinsic worth. With mutual fund AUM at ₹65.74 lakh crore in May 2025, per AMFI, value investing is thus gaining traction. How does it work? Let’s break it down.
What Is Value Investing in India?
Value investing in India involves picking stocks with low price-to-earnings (P/E) or price-to-book (P/B) ratios, often overlooked by the market. Think PSU banks or legacy firms like Coal India. Funds like ICICI Prudential Value Discovery target these, thus aiming for 12-15% returns, per SEBI data. Investors analyze financials—strong balance sheets, steady cash flows—to find gems. In 2024, value funds held ₹1.8 lakh crore AUM, per AMFI, thus thriving in market corrections.
Benefits: Stability and Long-Term Gains:
Value investing in India offers stability. Undervalued stocks, with low valuations, weather market dips better—a 5% Nifty fall in 2024 saw value funds drop just 3%, per IBEF. When markets recognize their worth, prices soar, delivering solid gains. For example, Nippon India Value Fund returned 14% in 2024, per the Economic Times. In addition, dividends from mature firms boost income, ideal for patient investors.
Risks and Taxation:
Value investing in India isn’t risk-free. Stocks may stay undervalued for years, delaying returns. Poor fundamentals can trap investors in “value traps.” In 2024, 30% of value funds lagged benchmarks, per S&P SPIVA, due to misjudged picks. Taxation follows equity rules: 20% short-term gains (under 1 year), 12.5% long-term (over ₹1.25 lakh), per SEBI. Moreover, high expense ratios (1-2%) in active value funds can erode gains, per Value Research.
Who Should Invest:
This suits patient, research-driven investors with 5+ year horizons, seeking steady growth. It’s also great for conservative savers or those balancing high-growth portfolios. In 2024, equity inflows hit ₹2.2 lakh crore, per IBEF, with value funds drawing steady interest. Check financial ratios and fund track records before investing. Learn more at the SEBI website.
Conclusion:
In conclusion, value investing in India unlocks hidden opportunities with disciplined analysis. It also offers a strategic approach for investors aiming for long-term wealth creation. By focusing on undervalued stocks with strong fundamentals, investors can navigate market fluctuations and achieve sustainable returns. Ready to hunt bargains? Explore more investment insights now!
– Ketaki Dandekar (Team Arthology)
Read more about Value Investing here – https://www.investopedia.com/value.asp