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 pharmaceutical companies trading at a P/E lesser than the industry average.
Supriya Lifescience Ltd.
Supriya Lifescience Ltd. is engaged in the manufacturing of Active pharmaceutical ingredients (APIs). The company produces 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anesthetic, vitamin, anti-asthmatic and anti-allergic.
With a market capitalization of Rs.3,281 crore, the share opened at Rs.412 per share on Tuesday, increasing around 1 percent as compared to the previous closing price.
The company has a P/E ratio of 27.5, which is lower than industry P/E of 36.16, signifying that the stock is trading at a lower price, and has an EPS of Rs.14.8.
Additionally, Supriya Lifescience Ltd. reports a Return on Capital Employed (ROCE) of 20.44 percent and a Return on Equity (ROE) of 14.61 percent.
Glenmark Life Sciences Ltd.
Glenmark Life Sciences, a subsidiary of Glenmark Pharmaceuticals Ltd, is one of the leading developers and manufacturers of select high-value Active Pharmaceutical Ingredients. The company further operates in contract development and manufacturing operations to offer services to specialty pharmaceutical companies.
With a market capitalization of Rs.10,677 crore, the share opened at Rs.871.40 per share on Tuesday, stable as compared to the previous closing price.
The company has a P/E ratio of 23.89, which is lower than industry P/E of 36.16, signifying that the stock is trading at a lower price, and has an EPS of Rs.36.48.
Furthermore, Glenmark Life Sciences Ltd. reports a Return on Capital Employed (ROCE) of 26.94 percent and a Return on Equity (ROE) of 20.19 percent.
Aarti Pharmalabs Ltd.
Aarti Pharmalabs Ltd. is a manufacturer of Pharmaceuticals and Nutraceuticals. It has dedicated facilities for the production of corticosteroids, cytotoxic medicines, and oncology products. Its range of API products includes Ramipril, Quinapril HCL, Budesonide, Bambuterol HCL, Apixaban, Rivaroxaban, Cinacalcet, and others.
With a market capitalization of Rs.5,435.75 crore, the share opened at Rs.595 per share on Tuesday, decreasing around 0.8 percent as compared to the previous closing price.
The company has a P/E ratio of 27.09, which is lower than industry P/E of 36.16, signifying that the stock is trading at a lower price, and has an EPS of Rs.22.14.
Moreover, Aarti Pharmalabs Ltd. reports a Return on Capital Employed (ROCE) of 15.38 percent and a Return on Equity (ROE) of 12.37 percent.
Written by – Siddesh S Raskar
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