The Price/Earnings to Growth ratio, popularly known as the ‘PEG’ ratio, is usually applied to determine a stock’s value along with the factorization of the company’s expected earnings growth.
A PEG ratio of less than one is generally considered a company with attractive prices having potential growth opportunities. Listed below are four stocks across various sectors that have a low PEG ratio:
Grasim Industries Limited
With a market capitalization of Rs 1.22 lakh crores, the stocks of Grasim Industries Limited, a cement company based in India, are currently trading at Rs 1,851.85, slipping around 0.60 percent as compared to the previous closing price of Rs 1,862.90 apiece.
During the recent financial years, the company has been successful in increasing its operating revenues as well as after-tax profits with the former increasing from Rs 95,701 crores during FY21-22 to Rs 117,627 crores during FY22-23, and, the latter moving up from Rs 10,310 crores to Rs 10,869 crores keeping the timeframe the same.
The company has a price-to-earnings ratio of 18.85, and, aligning the same with the growth estimates, the company portrays a PEG ratio of 0.97.
Indian Railway Finance Corporation Limited
With a market capitalization of Rs 1.08 lakh crores, the stocks of Indian Railway Finance Corporation Limited, a Government of India enterprise associated with the railway sector, are currently trading at Rs 82.69, slipping around 2.50 percent as compared to the previous closing price of Rs 84.75 apiece.
During the recent financial years, the company has been successful in increasing its operating revenues as well as after-tax profits with the former increasing from Rs 20,299 crores during FY21-22 to Rs 23,891 crores during FY22-23, and, the latter moving up from Rs 6,089 crores to Rs 6,337 crores keeping the timeframe the same.
The company has a price-to-earnings ratio of 17.29, and, aligning the same with the growth estimates, the company portrays a PEG ratio of 0.69.
Tata Power Company Limited
With a market capitalization of Rs 84,420.87 crores, the stocks of Tata Power Company Limited, engaged in the business of generating and transmitting electricity within and outside India, are currently trading at Rs 264.20, slipping around 2.80 percent as compared to the previous closing price of Rs 271.80 apiece.
During the recent quarters, the company has been successful in increasing its operating revenues as well as after-tax profits with the former increasing from Rs 12,453 crores during Q4FY22-23 to Rs 15,213 crores during Q1FY23-24, and, the latter moving up from Rs 759 crores to Rs 790 crores keeping the timeframe the same.
The company has a price-to-earnings ratio of 24.04, and, aligning the same with the growth estimates, the company portrays a PEG ratio of 0.56.
State Bank of India
With a market capitalization of Rs 5.23 lakh crores, the stocks of State Bank of India, a public-sector bank based in India, are currently trading at Rs 586.35, slipping around 0.90 percent as compared to the previous closing price of Rs 591.55 apiece.
During the recent financial years, the company has been successful in increasing its total income as well as after-tax profits with the former increasing from Rs 406,973 crores during FY21-22 to Rs 473,378 crores during FY22-23, and, the latter moving up from Rs 43,775 crores to Rs 56,558 crores keeping the timeframe the same.
The company has a price-to-earnings ratio of 7.82, and, aligning the same with the growth estimates, the company portrays a PEG ratio of 0.10.
Written by Amit Madnani
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