The PEG ratio (Price/Earnings to Growth ratio) is a valuation metric that compares a company’s P/E ratio to its expected earnings growth rate, helping investors assess whether a stock is overvalued or undervalued.
A PEG ratio below 1.0 suggests the stock may be undervalued relative to its growth potential, while a ratio above 1.0 indicates it may be overvalued
Here are three defence stocks with a PEG ratio of less than 1:
Data Patterns India Limited
Data Patterns India Limited is a leading provider of defense and aerospace electronics solutions in India, focusing on in-house development and manufacturing.
With a market capitalization of Rs.15,113 crores, Data Pattern’s share price closed at Rs.2,682 per share on Friday’s trading session, falling around 0.12 percent compared to its previous close.
The stock is trading at a PEG of 0.91. In terms of return ratios ROCE (Return on Capital Employed) stands at 19.7 percent and ROE (Return on Equity) stands at 14.3 percent.
As of June FY24, the company reported an order book of Rs.1,017.1 crore and anticipates a strong pipeline of Rs.2,000-3,000 crores over the next two years.
Looking forward to Data Patterns’ financial performance, revenue clinched by 15.6 percent to Rs.104 crore in Q1FY25 from Rs.90 crore in Q1FY24. During the same time frame, net profit increased 27 percent to Rs.33 crore from Rs.26 crore.
Astra Microwave Products Limited
Astra Microwave Products Ltd designs, develops and manufactures sub-systems for radio frequency and microwave systems utilized in defense, space, meteorology, and telecommunications.
With a market capitalization of Rs.8,854 crores, Astra Microwave Products’ share price closed at Rs.919.8 per share on Friday’s trading session, falling around 1.57 percent compared to its previous close.
The stock is trading at a PEG ratio of 0.62. The company’s return ratios are strong, with a Return on Capital Employed (ROCE) of 18.8 percent and a Return on Equity (ROE) of 15 percent.
As of June FY24, Astra Microwave Products Ltd reported an order book of Rs.2,099 crore, which is more than twice its FY24 revenue.
In Q1 FY25, revenue rose by 16 percent to Rs.155.18 crore from Rs.133.73 crore in Q1 FY24, while net profit improved to Rs.7.2 crore from a net loss of Rs.6.74 crore in the same period.
Nibe Limited
Nibe Ltd, established in 2005 and based in Pune, India, specializes in manufacturing critical components for the defense sector, electric vehicles, and software development.
With a market capitalization of Rs.2,725 crores, Nibe Limited’s share price closed at Rs.2,033.15 per share on Friday’s trading session, falling 1.51 percent compared to its previous close.
The stock is trading with a PEG ratio of 0.26. Nibe Ltd shows strong return ratios, with a Return on Capital Employed (ROCE) of 20.2 percent and a Return on Equity (ROE) of 18.9 percent.
As of June FY24, the company’s order book exceeds Rs.2.5 crore, highlighting growth potential in production capacity.
For Q1 FY25, Nibe Ltd’s revenue experienced a massive surge of 324.4 percent to Rs.109.28 crore from Rs.25.75 crore in Q1 FY24, while net profit saw a staggering increase of 500 percent to Rs.7.86 crore from Rs.1.31 crore during the same period.
Written by – Siddesh S Raskar
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