Undervalued ASX 200 Stocks in October 2025: Value Investing Opportunities Amid Market Volatility

The S&P/ASX 200 Index (XJO) remains a cornerstone of Australia's equity market, representing the 200 largest companies by market capitalization. As of October 2025, the index has undergone quarterly rebalances, with additions like Austal Ltd. (ASX:ASB) and Nick Scali Ltd. (ASX:NCK) reflecting shifting market dynamics. Amid heightened volatility and earnings revisions, value investors are increasingly scrutinizing undervalued constituents for long-term opportunities. This analysis explores four ASX 200 stocks-Immutep Limited (IMM), Nickel Industries (NIC), Imdex Ltd (IMD), and Aurizon Holdings (AZJ)-using financial metrics such as P/E ratios, debt levels, and earnings forecasts to identify compelling value propositions.

Market Context: ASX 200 Rebalancing and Sector Dynamics

The ASX 200's quarterly rebalances ensure alignment with market capitalization trends, with the September 2025 reshuffle adding nine stocks, including Greatland Resources and Droneshield, while removing others like Smartgroup. Financials remain the largest sector at 28.30% weight, but energy, materials, and healthcare have emerged as undervalued areas, according to Morningstar. For instance, energy stocks are trading at a discount assuming a long-term oil price of USD 60/barrel, while mining tech firms like Imdex benefit from a 65% year-over-year surge in small miner capital raising, as reported by Fool Australia.

1. Immutep Limited (ASX: IMM): Biotech Bargain with High Growth Potential

Immutep, a biotechnology firm developing immunotherapy treatments, trades at A$0.28, a 44.7% discount to its estimated fair value of A$0.50, according to Yahoo Finance. Despite reporting a net loss of A$61.43 million for the year ending June 2025, Immutep's Immutep PE ratio shows a P/E of -6.84 (as of October 2025), reflecting its high-risk, high-reward profile. Strategic partnerships and clinical trial advancements position Immutep for potential profitability within three years. For value investors, the key risks include regulatory hurdles and cash flow constraints, but the potential upside in oncology and autoimmune disease markets is substantial, a point also emphasized by Yahoo Finance.

2. Nickel Industries (ASX: NIC): Debt Restructured, Earnings on the Rise

Nickel Industries, a diversified industrial group, has restructured its debt through an $800 million note issuance at 9%, improving financial flexibility, per the Nickel Industries statistics. The stock trades at a 30.9% discount to fair value, with a trailing P/E of 34.31 and a forward P/E of 32.37, suggesting optimism about future earnings. H1 2025 net income reached US$11.27 million, driven by cost efficiencies and demand in its logistics and manufacturing segments. A debt-to-equity ratio of 0.41 and a Debt/EBITDA of 3.69 indicate manageable leverage, though investors should monitor commodity price fluctuations.

3. Imdex Ltd (ASX: IMD): Mining Tech Innovator with Resilient Margins

Imdex, a supplier of mining equipment and services, has seen its Imdex P/E ratio rise from 22.2 in 2023 to 34.31 in October 2025, reflecting improved market conditions. The company's regulated Network business and Coal haulage operations generated underlying EBITDA of $1,576 million in FY25, with margins expanding due to higher exploration spending, supported by the Imdex statistics. While its P/E premium suggests some valuation catch-up, Imdex's strong cash flow and market share gains in the mining tech sector justify its inclusion in a value portfolio.

4. Aurizon Holdings (ASX: AZJ): Undervalued Infrastructure Play

Aurizon, Australia's largest rail freight operator, has a trailing P/E of 19.29 and a forward P/E of 13.40, significantly below the ASX 200 average, as highlighted in the Aurizon Q4 preview. Its debt-to-equity ratio of 1.39 highlights leverage risks, but the company's regulated Network segment and a $150 million share buy-back signal confidence in long-term cash flow stability, per the Aurizon statistics. Recent earnings revisions show a decline in full-year 2025 estimates-from $0.23 to $0.20 per share-due to macroeconomic headwinds, a trend discussed in the Fool Australia FY25 coverage. However, the Coal segment's resilience and a contract win with BHP Group present growth catalysts.

Strategic Considerations for Value Investors

The identified stocks exemplify the interplay between market volatility and fundamental strength. Immutep and Nickel Industries offer high-growth, low-valuation opportunities in biotech and industrial sectors, while Imdex and Aurizon provide exposure to resilient infrastructure and mining demand. Investors should balance these picks with sector diversification and macroeconomic hedging, particularly given the ASX 200's heavy weighting toward financials.

Conclusion

The October 2025 ASX 200 rebalances and earnings revisions have created a fertile ground for value investors. By focusing on companies like Immutep, Nickel Industries, Imdex, and Aurizon-each with compelling financial metrics and sector-specific tailwinds-investors can capitalize on market inefficiencies. However, rigorous due diligence on earnings sustainability and debt management remains critical in navigating Australia's volatile equity landscape.