The price-to-earnings ratio (P/E) is one of the most commonly used metrics to find undervalued stocks. It is a relative measure of valuation that is compared with the industry P/E and with the historic P/E of a company. When the P/E is lower than the Industry P/E or its historic P/E, it is usually considered to be undervalued, however, further research may be required to conclude.
The price-to-earnings ratio compares a company’s share price to its earnings per share and indicates whether a stock at its current market price is expensive or cheap.
Here are a few stocks with a P/E less than industry P/E:
Bajaj Consumer Care Ltd
Bajaj Consumer Care is engaged in the business of cosmetics, toiletries and other personal care products, with a presence in both domestic and international markets.
The company’s shares closed at ₹ 234.55 and it is a small-cap company with a market capitalization of ₹ 3,281 crores. Its shares were trading at a price-to-earnings ratio of 22.13, which is lower than the industry P/E of 54.24, indicating that it might be undervalued.
Vadilal Industries Ltd
Vadilal Industries is engaged in the business of manufacturing ice cream, frozen desserts, juices, and candy and processing and exporting processed food products, such as frozen fruits and vegetables, canned fruit pulp, ready-to-eat and ready-to-serve products.
The company’s shares closed at ₹ 2781.60 and it is a small-cap company with a market capitalization of ₹ 2,054 crores. Its shares were trading at a price-to-earnings ratio of 17.43, which is lower than the industry P/E of 21.30, indicating that it might be undervalued.
KRBL Ltd
KRBL is a leading basmati rice producer and has fully integrated operations in every aspect of the basmati value chain, right from seed development, to branding and marketing.
The company’s shares closed at ₹ 399.20 and it is a small-cap company with a market capitalization of ₹ 9,513 crores. Its shares were trading at a price-to-earnings ratio of 13.57, which is lower than the industry P/E of 21.30, indicating that it might be undervalued.
Written by Simran Bafna
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