The PEG ratio, or 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.
On the other side, Auto Ancillary companies refer to the companies that manufacture and supply parts, components, and accessories for the automotive industry.
These companies provide critical components that are used in the production and maintenance of vehicles, such as engines, transmissions, brakes, suspensions, and electrical systems.
Here are a few such auto-ancillary stocks with a PEG ratio of less than 1:
Fiem Industries Limited
With a market capitalisation of Rs. 3,536.3 crores, the shares of one of the leading manufacturers of automotive lighting & signalling equipment in India rose by 1.5 percent on BSE to reach an intraday high of Rs. 1,362.1 during Friday’s trading session, compared to its previous closing price of Rs. 1,342.35.
The company has reported a low PEG (Price/Earnings-to-Growth) ratio of 0.87, indicating that the stock is undervalued.
On a year-on-year basis, the company reported a significant 28.2 percent increase in revenue from operations, rising from Rs. 432.8 crore in Q4 FY22-23 to Rs. 554.8 crore in Q4 FY23-24, while the after-tax profit stood at Rs. 46.33 crore in Q4 FY23-24 from Rs. 38.07 crore in Q4 FY22-23, reflecting a growth of 21.7 percent.
The stock delivered positive returns of around 52.2 percent in one year, as well as nearly 33.5 percent returns year-to-date.
Fiem Industries Limited is engaged in the business of manufacturing automotive lighting and signalling equipment, rearview mirrors, plastic moulded parts and other auto components.
The company also manufactures LED luminaries/LED products for general lighting applications and LED Integrated Passenger Information System for buses and railways etc.
Banco Products (India) Limited
With a market capitalisation of Rs. 4,820.7 crores, the stock moved up by 2.13 percent on BSE to reach an intraday high of Rs. 698 during Friday’s trading session, compared to its previous closing price of Rs. 683.4.
The company has reported a low PEG (Price/Earnings-to-Growth) ratio of 0.57, indicating that the stock is undervalued.
On a year-on-year basis, the company reported a significant 19 percent increase in revenue from operations, rising from Rs. 602.4 crore in Q4 FY22-23 to Rs. 717.4 crore in Q4 FY23-24, while the after-tax profit stood at Rs. 68.2 crore in Q4 FY23-24 from Rs. 51.03 crore in Q4 FY22-23, reflecting a growth of 33.6 percent.
The stock delivered multibagger returns of around 122.2 percent in one year, and nearly 7.07 percent of positive returns year-to-date.
Banco Products (India) Limited is engaged in the manufacturing and selling of heat exchangers/cooling systems, along with supplying engine cooling components and engine sealing gaskets to the automotive industry.
Sharda Motor Industries Limited
With a market capitalisation of Rs. 7,694.5 crores, the shares of India’s largest manufacturer of emission control systems rose by 0.4 percent on BSE to reach an intraday high of Rs. 2,599.25 during Friday’s trading session, compared to its previous closing price of Rs. 2,588.45.
The company has reported a low PEG (Price/Earnings-to-Growth) ratio of 0.91, indicating that the stock is undervalued.
On a year-on-year basis, the company reported a significant 2.2 percent increase in revenue from operations, rising from Rs. 688.2 crore in Q4 FY22-23 to Rs. 703.4 crore in Q4 FY23-24, while the after-tax profit stood at Rs. 88.3 crore in Q4 FY23-24 from Rs. 62.07 crore in Q4 FY22-23, reflecting a growth of 42.3 percent.
The stock delivered multibagger returns of around 224.3 percent in one year, and nearly 98.6 percent of positive returns year-to-date.
Incorporated in 1986, Sharda Motor Industries Limited is primarily engaged in the manufacturing and assembly of Auto Components, and serves as a ‘Tier I’ vendor for some of the major Automobiles and Electronics Original Equipment Manufacturers (OEMs).
The production range of Sharda Motors includes exhaust systems, catalytic convertors, suspension systems and sheet metal components for the Automotive.
Written by Shivani Singh
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