Sterlite Industries India Limited (ADR) (SLT), Tata Motors Limited (ADR) (TTM): These Indian Stocks Look Cheap

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When hunting for bargain stocks, tangible book value is a handy metric. Unlike regular book value, which includes goodwill and other intangibles, tangible book value represents only assets you can see and touch. When a company trades well below its tangible book value (say 75% or less), you might have a bargain on your hands.

Tangible book bargains are great, but in the world of stocks they can be very rare. A diversified portfolio of them will certainly serve you well. But just because a stock has a high tangible book value doesn’t necessarily make it overpriced. Looking at other metrics, including those specific to a company’s industry, can identify bargains as well.

Trading for less than half of its tangible value

Sterlite Industries India Limited (ADR) (NYSE:SLT)Sterlite Industries India Limited (ADR) (NYSE:SLT) is a diversified mining and metals company with a price/tangible book ratio of .47. Now that’s cheap! In addition to its mining and metals operations, Sterlite Industries India Limited (ADR) (NYSE:SLT) controls 1.3% of India’s electricity generation capacity.

Its mines produce aluminum, copper, and zinc. In its latest annual report, the company reported that it held a 17% market share in the Indian aluminum market. Excluding China, India is the fastest growing aluminum market in Asia, with consumption expected to increase at an 8.9% compound annual growth rate, or CAGR, through 2020.

Sterlite Industries India Limited (ADR) (NYSE:SLT)’s copper business primarily consists of custom smelting. It had a 40% market share in the Indian custom copper smelting market in 2013. Wood Mackenzie projects demand for refined copper in India will grow at a CAGR of 7% through 2020.

The company is the only integrated producer of zinc in India. With an 82% market share in the Indian zinc market as of 2013, a market projected to grow at a CAGR of 6% through 2020, Sterlite Industries India Limited (ADR) (NYSE:SLT) holds a dominant position.

This is a company trading on the market for $4.2 billion. It has net working capital of $5.61 billion, or 33.6% greater than its market cap. Cash flow from operations, or OCF, is solid. OCF was a negative $439.7 million in 2008, but has been positive ever since. The 2008-2010 average was $471.6 million, the 2011-2013 figure was $1.85 billion.

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