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 steel and iron company stocks trading at a P/E lesser than the industry average:
Godawari Power and Ispat Ltd
Godawari Power & Ispat primarily operates in the mining of iron ore and the production of iron ore pellets, sponge iron, steel billets, wire rods, H.B. wire, and ferro alloys, along with electricity generation.
With a market capitalization of Rs.13,429 crore, the share of Godawari Power & Ispat Ltd reached an intra-day high of Rs.1,001.95 per share on Friday, increasing 3.6 percent from its previous closing price.
The company has a P/E ratio of 13.5, lower than the industry P/E of 19.05, signifying that the stock is trading at a lower price, and has an EPS of Rs.72.9.
Additionally, Godawari Power & Ispat Ltd reports a Return on Capital Employed (ROCE) of 28.93 percent and a Return on Equity (ROE) of 20.83 percent.
Prakash Industries Ltd
Prakash Industries Limited, founded in 1980, is a major diversified Indian company engaged in mining, steel, and power sectors. It operates an integrated steel plant in Chhattisgarh and a 5 MW wind farm in Tamil Nadu.
With a market capitalization of Rs.3,191 crore, the share of Prakash Industries Limited reached an intra-day high of Rs.186.25 per share on Friday, increasing 4.6 percent from its previous closing price.
The company has a P/E ratio of 9.07, lower than the industry P/E of 19.05, signifying that the stock is trading at a lower price, and has an EPS of Rs.19.5.
Additionally, Prakash Industries Limited reports a Return on Capital Employed (ROCE) of 11.92 percent and a Return on Equity (ROE) of 11.51 percent.
Electrotherm (India) Ltd
Electrotherm Limited is an Indian technology conglomerate with diverse operations across steelmaking, foundry, heat treatment, electric vehicle design and manufacturing, and the energy sector.
With a market capitalization of Rs.1,163 crore, the share of Electrotherm Limited reached an intra-day high of Rs.930.8 per share on Friday, hitting 2 percent upper circuit from its previous closing price.
The company has a P/E ratio of 3.12, lower than the industry P/E of 19.05, signifying that the stock is trading at a lower price, and has an EPS of Rs.304.
Additionally, Electrotherm Limited reports a Return on Capital Employed (ROCE) of 38.15 percent and a Return on Equity (ROE) of negative 40.63 percent.
Written by – Siddesh S Raskar
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