The EV/EBITDA ratio compares a company’s total value (including debt) with its cash earnings (excluding financing costs, taxes, and non-cash expenses). It shows how much investors are willing to pay for every rupee of operating profit generated by the company.
A higher EV/EBITDA ratio indicates that investors expect rapid growth and are willing to pay a premium for the company’s future earnings potential. A lower ratio could indicate that the company is undervalued or has limited growth potential.
Here are 3 EV stocks with high EV/EBITDA Ratio
Servotech Power Systems, established in 1998, manufactures LED lighting, UPS (uninterruptible power supply) systems, inverters, and batteries.
Servotech Power Systems Ltd has an EV/EBITDA ratio of 83, the company has a low price-to-earnings ratio is 126 compared to its peer company, and a low debt-to-equity ratio of 0.52.
The share price of the company rose 13 percent in six months and 349 percent in the year to date. For instance, if an investor invested Rs 1 Lakh a year ago the current value would be 4.49 lakhs.
Looking at the company’s financial statements operating revenues fell by 39 percent from Rs 86.31 crores in Q2FY23 to Rs 52.01 crores in Q2FY24, Furthermore, net profit decreased 71 percent from Rs 3.87 crores to Rs 1.11 crores during the same period.
With a market capitalization of Rs. 1,966 Crores, the shares of Servotech Power Systems closed at Rs. 92.4, up 5 percent from its previous day’s close price of Rs. 92.40
Olectra Greentech Limited was founded in 1992. The company primarily produces composite polymer insulators and electric buses. The company’s registered office is in Hyderabad.
Olectra Greentech Ltd has an EV/EBITDA ratio of 80, a low debt-to-equity ratio of 0.16, a return on equity of 8.2%, a return on capital employed of 13%, and a net profit margin of 6%.
The share price of the company rose by 90 percent in the last six months and 331 percent in the last year. It is a multi-bagger stock, for instance, if an investor invested Rs. 1 lakh a year ago the current value of the investment would be Rs. 4.31 Lakhs.
Looking at their financials, the company’s net revenue has increased 33% YoY from ₹256 crores to ₹342 crores. The company’s net profit increased by 80% YoY, from ₹15 crores to ₹27 crores.
Olectra Greentech Ltd is a small-cap company with a market capitalization of Rs. 16,419 crores, on Friday, the share price of the company closed up by 0.93 percent at Rs 2,010 per share from the previous close of Rs 1,879.80.
JBM Auto Ltd, established in 1983, is an automotive company that produces and sells sheet metal components, tools, dies and molds, and buses, as well as spare parts, accessories, and bus maintenance contracts.
JBM Auto Limited has an EV/EBITDA ratio of 47 a return on equity of 13 percent, a return on capital employed of 12 percent, and a net profit margin of 4 percent.
The share price of the company rose by 56 percent in the last six months and 273 percent in the last year. It is a multi-bagger stock, for instance, if an investor invested Rs. 1 lakh a year ago the current value of the investment would be Rs. 3.73 Lakhs.
Looking at their financials, the company’s net revenue has increased 71% YoY from ₹953 crores to ₹1,346 crores. The net profit of the company rose by 48% YoY from ₹35 crores to ₹52 crores.
JBM Auto Ltd is a mid-cap company with a market capitalization of Rs. 23,835 crores, on Wednesday, the share price of the company closed up by 1.73 percent at Rs 2,000 per share from the previous close of Rs 2,027.10.
Written by Sriram KV
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