A company’s price-to-earnings (P/E) ratio that is lower than the industry average may indicate undervaluation or underlying issues. Investors should investigate further to understand if the low P/E signals a buying opportunity or reflects fundamental problems affecting the company’s future growth prospects.
Here are the undervalued stocks with a PE less than the industry:
1. Mazagon Dock Shipbuilders Ltd
Mazagon Dock Shipbuilders Limited is engaged in building and repairing of ships, submarines, various types of vessels, and related engineering products. The Company is into the construction of warships and submarines. It is also engaged in the production of defense equipment.
With a market capitalization of Rs 94,398.99 crore, the shares were closed at Rs 2340.20 per share, increased around 4.35 percent as compared to the previous closing price. Moreover, the stock might be deemed undervalued, given its PE ratio of 34.4 times, in contrast to the industry average of 41.2 times.
The company’s order book stands at ₹34,787 crore as of December 31, 2024. It anticipates orders for three P-75 submarines by March 2025. With MDL as the sole technically suitable bidder for P-75(I), commercial discussions are expected soon, targeting order placement next fiscal year.
The company has a ₹5,000 crore CAPEX plan over 4-5 years, focusing on developing adjacent land with a graving dry dock and expanding the Nhava Yard. For FY25-26, the initial CAPEX is set at ₹500 crore, supporting long-term growth and infrastructure expansion.
2. Apar Industries Ltd
Apar Industries Limited (Apar) is a manufacturer and supplier of conductors, a variety of cables, specialty oils, polymers and lubricants. The Company’s segments include Conductor, Transformer & Specialities Oils and Power/Telecom Cables.
With a market capitalization of Rs 24,682.63 crore, the shares were closed at Rs 6,144.80 per share, increased around 7.47 percent as compared to the previous closing price. Moreover, the stock might be deemed undervalued, given its PE ratio of 30.5 times, in contrast to the industry average of 47.3 times.
Management remains confident in the company’s fundamentals, expecting growth in domestic and export markets. It focuses on premium products and expanding U.S. approvals, anticipating a market recovery. Increased inquiries signal growth, while Industry 4.0 initiatives aim to boost productivity and enhance margins.
The company targets conductor margins at ₹28,500 annually, expecting improvement as the product mix stabilizes. The cable division aims for 25% top-line growth in value terms, while the conductor division expects 10% volume growth. The oil division projects a 5-8% increase in volume.
Also read: Market leader stock in which promoter increases stake in the Co. to keep an eye on
3. Adani Power Ltd
Adani Power Limited is a thermal power producer in India with a power generation capacity of approximately 12,450 megawatts (MW) comprising 12,410 MW of thermal power plants and a 40 MW solar power project. It focuses on providing power generation and coal trading.
With a market capitalization of Rs 1.95 lakh crore, the shares were closed at Rs 505.95 per share, increased around 0.59 percent as compared to the previous closing price. Moreover, the stock might be deemed undervalued, given its PE ratio of 15.2 times, in contrast to the industry average of 28.8 times.
The company aims to surpass 30 GW of operating capacity by 2030, with 11.2 GW equipment orders placed. Expansion projects at Mahan (1,600 MW) and Raipur (1,600 MW) are progressing, with Mahan over 40% complete. Discussions are ongoing to revive the 1,320 MW Korba project.
Management is optimistic about future growth, driven by strong economic expansion and rising electricity demand. They are confident in securing long-term PPAs and plan to fund projects through internal accruals, ensuring sustainable capacity expansion and financial stability.
Written by Abhishek Singh
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