P/E (Price to Earnings) Ratio defines the ratio of the current price of a company’s share in relation to its earnings per share (EPS), which is a frequently used data to define the value of a stock.
In some instances, a company’s share price is considerably higher than its earnings, indicating that the stock is expensive(overvalued). This suggests investors to avoid making substantial investments in such expensive companies since it signifies excessive speculation.
If, on the other hand, a company has a lower-than-average P/E, it means that its stock prices are undervalued in relation to its earnings. Value investors perceive this circumstance as a favourable investing indicator.
This strategy helps investors to make informed decisions before investing in any stocks.
Here are two multibagger small-cap IT stocks with low P/E ratios
Nucleus Software Exports Ltd
Nucleus Software is the leading provider of lending and transaction banking products to the global financial service industry. Company provides support to retail lending, corporate banking, cash management, mobile and internet banking, automotive finance and other business areas.
With a market capitalization of Rs 3,166 crores, the firm falls into the small-cap category. On July 14, shares closed at Rs 1,180 a share, a 6.30 percent increase from the previous close price.
The company’s share price has climbed from Rs 402.30 to current values in the last
year, yielding multibagger returns of 180%. As a result, if an investor bought 1 lakh company shares the previous year, their holdings are now worth 2.80 lakhs!
The price-to-earnings ratio of the firm is 24.78, which is lower than the industry P/E of 60.11, indicating that the stock is trading at a lower price, and it has an EPS of 47.74.
Revenue climbed by 27% year on year to 634 crore in FY 22-23 from the previous year, while net profit increased by 217% to Rs 127 crore. Its debt-to-equity ratio is 0.02.
Aurionpro Solutions Ltd
Aurionpro Solution is engaged in providing software products in the fields of Transaction Banking Platform,Smart Transportation experience and Cybersecurity solution .
Aurionpro Payment Solutions Pvt. Ltd., a wholly owned subsidiary received an in-principle approval from the Reserve Bank of India to set up a Payment Aggregator business.
The company is identified as a small-cap with a market capitalization of Rs 2,309 crores. Shares closed at Rs 970.25 per share on July 14, a 1.00 percent decrease from the previous close price.
In the previous year, the company’s share price has risen from Rs 264.10 to current levels, giving 271% multibagger gains. As a result, if an investor purchased 1 lakh shares of a company in the previous year, their holdings are now worth 3.71 lakhs!
The price-to-earnings ratio of the firm is 23.66, which is lower than the industry P/E of 60.11, indicating that the stock is trading at a lower price, and it has an EPS of 42.68.
Revenue climbed by 30% year on year to 659 crore in FY 22-23 from the previous year, while net profit increased by 36% to Rs 102 crore. Its debt-to-equity ratio is 0.15.
Written by Omkar Chitnis
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