A low price-to-earnings ratio (P/E) indicates that a company’s stock price is relatively low as compared to its earnings. Investors use this metric not only to determine a stock’s market value but also in determining future earnings growth. The P/E ratio is used in comparison with the industry average and also with the historical P/E.
Here are a few Nifty 50 stocks with a P/E ratio that is lower than their industry P/E, indicating that these stocks might be undervalued as compared to their peers:
Wipro
Wipro is a global Information technology, consulting and business process services (BPS) company and the 4th largest Indian player in the global IT services industry behind TCS, Infosys and HCL Technologies.
The company’s shares are trading at a price-to-earnings (P/E) ratio of 19.90, which is lower than the industry P/E of 27.24. Wipro is a large-cap company with a market capitalization of ₹2,31,925 crores and its shares are currently trading at ₹422 apiece.
Infosys
Infosys provides consulting, technology, outsourcing and next-generation digital services to enable clients to execute strategies for their digital transformation.
The company’s shares are trading at a price-to-earnings (P/E) ratio of 25.10, which is lower than the industry P/E of 27.24. Infosys is a large-cap company with a market capitalization of ₹6,02,380 crores and its shares are currently trading at ₹1,452 apiece.
Grasim Industries
Grasim Industries, the flagship company of the Aditya Birla group, ranks amongst India’s largest private sector companies. Its core businesses consist of viscose Staple fibre (VSF), caustic soda, speciality chemicals, and rayon-grade wood pulp (RGWP) with plants at multiple locations.
The company’s shares are trading at a price-to-earnings (P/E) ratio of 16.80, which is lower than the industry P/E of 22.35. Grasim Industries is a large-cap company
with a market capitalization of ₹1,15,611crores and its shares are currently trading at ₹1,756 apiece.
Mahindra & Mahindra
Mahindra & Mahindra is one of the most diversified automobile companies in India with a presence across 2-wheelers, 3-wheelers, PVs, CVs, tractors & earthmovers.
The company’s shares are trading at a price-to-earnings (P/E) ratio of 16.80, which is lower than the industry P/E of 20.25. Mahindra & Mahindra is a large-cap company with a market capitalization of ₹192,000 crores and its shares are currently trading at ₹1,544 apiece.
Written by Simran Bafna
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