What is Value Investing ?

What is value investing?

Samir would like to learn more about value investing. Ashish, his friend and avid trader at Angel One, shares the following:

Let's look at two manufacturing companies that are very similar: Profit Enterprises and ABC filters. Their current net worth is 500 million rupees. ABC filters' market capitalization, or market value, is 250 crore rupees. The market has given ABC filters an inferior valuation, which is half of its net worth. The market capitalization of Pro-filt Enterprises is 500 crore rupees. Pro-filt Enterprises has been valued by the market at its current net worth. ABC filters trades at half the value of pro Profit Enterprises, and at a discount from its actual value. If both companies have the same prospects, ABC filters will provide a higher return on investment in the future. This is value investing.

This concept was used by Warren Buffett to create enormous wealth. Samir understands now the value of value investing and is ready to trade.