The PEG ratio, which stands for Price/Earnings-to-Growth, is a metric that helps evaluate whether a stock is undervalued or overvalued by taking into account both the stock’s price-to-earnings (P/E) ratio and its expected earnings growth rate.
Addionally, Return on Equity (RoE) is another key financial metric that measures a company’s profitability in relation to shareholders’ equity, and is calculated by dividing net income by average shareholders’ equity, expressed as a percentage.
This ratio indicates how effectively a company is utilising the capital invested by its shareholders to generate profits.
A higher ROE usually signifies greater efficiency in converting equity financing into net income, making it an important tool for investors assessing the financial health and performance of a business. However, it’s important to interpret RoE in context, as acceptable levels can vary significantly between different sectors.
Following are a few stocks with a PEG ratio of less than 1 and RoE of more than 20:
Ganesh Housing Corporation Limited
With a market capitalisation of Rs. 10,413.8 crores, the shares of a leading real estate developer in Gujarat moved up by 3.3 percent on BSE, to reach an intraday high of Rs. 1,285 on Friday.
Ganesh Housing Corporation has reported a low PEG ratio of 0.25, indicating that the stock may be undervalued. Additionally, the company posted a Return on Equity (ROE) of 41.6 percent and a Return on Capital Employed (ROCE) of 45 percent.
In Q2 FY25, the company witnessed a significant growth in its revenue from operations, reaching Rs. 237 crores, a year-on-year increase of around 45.4 percent. This was accompanied by a net profit growth of nearly 83.7 percent to Rs. 158 crores, during the same period.
Over the last one year, the stock has delivered multibagger returns of about 201 percent, and has gained nearly 165.7 percent year-to-date.
Incorporated in 1991, Ganesh Housing Corporation Limited is engaged mainly in the business of real estate promotion and development in residential and commercial segments and infrastructure projects.
Styrenix Performance Materials Limited
With a market capitalisation of Rs. 4,429 crores, the stock moved up by 0.5 percent on BSE, to reach an intraday high of Rs. 2,528.85 on Friday.
Styrenix Performance Materials has reported a low PEG ratio of 0.27, indicating that the stock may be undervalued. Additionally, the company posted a Return on Equity (ROE) of 24 percent and a Return on Capital Employed (ROCE) of 31.4 percent.
In Q2 FY25, the company witnessed a significant growth in its revenue from operations, reaching Rs. 653 crores, a year-on-year increase of around 9.8 percent. This was accompanied by a net profit growth of nearly 25 percent to Rs. 70 crores, during the same period.
Over the last one year, the stock has delivered positive returns of about 98.5 percent, and has gained nearly 74.3 percent year-to-date.
Styrenix Performance Materials Limited, formerly known as INEOS Styrolution India Limited, is engaged in the manufacturing, trading and sale of engineering thermoplastics.
The company is a market leader in the production of styrenic applications such as ABS (Acrylonitrile Butadiene Styrene) and SAN (Styrene Acrylonitrile).
Kirloskar Brothers Limited
With a market capitalisation of Rs. 18,168.8 crores, the shares of India’s 1st and largest pump manufacturer moved up by nearly 1 percent on BSE, to reach an intraday high of Rs. 2,338.8 on Friday.
Kirloskar Brothers has reported a low PEG ratio of 0.27, indicating that the stock may be undervalued. Additionally, the company posted a Return on Equity (ROE) of 21.7 percent and a Return on Capital Employed (ROCE) of 27.3 percent.
In Q2 FY25, the company witnessed a significant growth in its revenue from operations, reaching Rs. 1,036 crores, a year-on-year increase of around 13.5 percent. This was accompanied by a net profit growth of nearly 90.2 percent to Rs. 97 crores, during the same period.
Over the last one year, the stock has delivered multibagger returns of about 155.8 percent, and has gained nearly 132 percent year-to-date.
Established in 1888, Kirloskar Brothers Limited, a part of the Kirloskar Group, is engaged in providing fluid management solutions globally. The key products of the company are engineered pumps, industrial pumps, agriculture and domestic pumps, valves, and hydro turbines.
Angel One Limited
With a market capitalisation of Rs. 26,119.3 crores, the shares of the largest listed retail stock broking house in India moved up by 2.4 percent on BSE, to reach an intraday high of Rs. 2,953.7 on Friday.
Angel One has reported a low PEG ratio of 0.28, indicating that the stock may be undervalued. Additionally, the company posted a Return on Equity (ROE) of 43.3 percent and a Return on Capital Employed (ROCE) of 38.7 percent.
In Q2 FY25, the company witnessed a significant growth in its revenue from operations, reaching Rs. 1,515 crores, a year-on-year increase of around 44.6 percent. This was accompanied by a net profit growth of nearly 39.2 percent to Rs. 423 crores, during the same period.
Over the last one year, the stock has delivered positive returns of about 6.5 percent, but has fallen nearly 20.5 percent year-to-date.
Incorporated in 1996, Angel One Limited is engaged in the business of stock, currency and commodity broking, providing margin trading facility, depository services and distribution of mutual funds, to its clients; and earns brokerage, fees, commission and interest income thereon.
Indus Towers Limited
With a market capitalisation of Rs. 92,164.2 crores, the shares of India’s leading provider of passive telecom infrastructure moved up by nearly 1.7 percent on BSE, to reach an intraday high of Rs. 353.6 on Friday.
Indus Towers has reported a low PEG ratio of 0.56, indicating that the stock may be undervalued. Additionally, the company posted a Return on Equity (ROE) of 24.2 percent and a Return on Capital Employed (ROCE) of 22.1 percent.
In Q2 FY25, the company witnessed a significant growth in its revenue from operations, reaching Rs. 7,465 crores, a year-on-year increase of around 4.7 percent. This was accompanied by a net profit growth of nearly 71.7 percent to Rs. 2,224 crores, during the same period.
Over the last one year, the stock has delivered positive returns of about 77 percent, and has gained nearly 60.6 percent year-to-date.
Indus Towers Limited is a telecommunications tower infrastructure service provider, and it deploys, owns, operates and manages telecom towers and communication structures, for various mobile operators.
Indus Towers Limited was formed by the merger of Bharti Infratel Limited and Indus Towers, and this merger created one of the largest telecom tower companies in the world.
Written by Shivani Singh
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