New Delhi, June 2 -- Penny stocks can offer high growth potential if evaluated carefully. However, investors should approach such stocks with caution, as some companies trade at lower prices simply due to a low face value of Re 1 or stock splits, rather than weak fundamentals.

A low share price alone does not make a stock undervalued or risky. Investors should evaluate the quality of the business, earnings growth, cash flows, promoter credibility, and long-term industry prospects before investing.

Here are three undervalued Indian stocks that trade for less than Rs.100 a share, and at a lower price-to-earnings (PE) and price-to-book (PB) ratio than the indices to which they belong.

South Indian Bank is a private sector bank headquarter...