The price-to-earnings (P/E) ratio measures a company’s share price relative to its earnings per share. A high P/E ratio may suggest that a stock is overvalued, with investors paying more for each unit of earnings growth.
Conversely, a lower P/E ratio compared to market averages or industry peers is generally considered advantageous, as it indicates that investors are paying less for each rupee of earnings, potentially offering better value.
Here is a list of a few financially strong stocks trading at a P/E lesser than the industry average:
Coal India Ltd
Coal India Ltd. is a Maharatna company primarily engaged in the mining and production of coal and coal washeries. The company operates through its subsidiaries in 83 mining areas spread over eight states of India.
With a market capitalization of Rs.3.08 lakh crore, the share closed at Rs.499.1 per share on Tuesday, decreasing 1.45 percent from its previous closing price.
The company has a P/E ratio of 8.44, lower than industry P/E of 22.95, signifying that the stock is trading at a lower price, and has an EPS of Rs.59.3.
Additionally, Coal India Ltd. reports a Return on Capital Employed (ROCE) of 63.6 percent and a Return on Equity (ROE) of 52 percent.
Bajaj Auto Ltd
Bajaj Auto Limited is an Indian multinational automotive manufacturing company based in Pune. It manufactures motorcycles, scooters, and auto rickshaws. Bajaj Auto is a part of the Bajaj Group.
With a market capitalization of Rs.2.63 lakh crore, the share closed at Rs.9,412 per share on Tuesday, decreasing 0.8 percent from its previous closing price.
The company has a P/E ratio of 32.9, lower than industry P/E of 147.43, signifying that the stock is trading at a lower price, and has an EPS of Rs.285.
Additionally, Bajaj Auto Ltd. reports a Return on Capital Employed (ROCE) of 33.5 percent and a Return on Equity (ROE) of 26.5 percent.
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HCL Technologies Ltd
HCL Technologies Limited, doing business as HCLTech, is an Indian multinational information technology consulting company headquartered in Noida. HCLTech specializes in a range of services, including software-led IT solutions, remote infrastructure management, engineering and R&D services, and business process outsourcing (BPO).
With a market capitalization of Rs.4.3 lakh crore, the share closed at Rs.1,584 per share on Tuesday, increasing 1.4 percent from its previous closing price.
The company has a P/E ratio of 26.2, lower than industry P/E of 31.84, signifying that the stock is trading at a lower price, and has an EPS of Rs.60.5.
Additionally, HCL Technologies Ltd. reports a Return on Capital Employed (ROCE) of 29.6 percent and a Return on Equity (ROE) of 23.3 percent.
Written by – Siddesh S Raskar
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