The P/E (Price to Earnings) ratio compares a company’s current share price to its earnings per share (EPS), which is a generally used measure to determine a stock’s value.
A company with a lower P/E ratio is better than market competitors with a higher P/E ratio. This indicates that investors are paying less money for every dollar of earnings generated by a firm. This method supports investors in making informed decisions before investing in companies.
Here are three undervalued stocks under Rs 50
Axita Cotton Ltd
Axita Cotton Ltd is a micro-cap stock with a market capitalization of Rs 694 crores. The company’s shares closed at Rs 25.75 per share, up 0.78 percent on Friday from the previous close price.
The company’s P/E ratio is 32.26, which is lower than the industry’s P/E ratio of 40.43, indicating that the stock is trading at a lower price or the stock is undervalued.
Axita Cotton shares have gained 15 percent in the last month and 34 percent in the last six months.
In the recent financial year, Axita Cotton’s margins have slightly improved with a net profit margin of 3.08 percent and an operating margin of 4.19 percent. Additionally, the company’s return on equity stood at 32.52 percent and the return on capital employed at 39.68 percent.
The company’s revenue has increased by 326 percent year on year, from Rs 91 crore in Q2FY23 to Rs 388 crore in Q2FY24. During the same period, net profit jumped by 180 percent from Rs 2.29 crore to Rs 6.51 crore.
Axita Cotton is engaged in the business of manufacturing, trading, processing, and finishing of cotton bales. As well as in the business is Ginning and Pressing of Seed Cotton and the production of cotton bales and cotton seeds.
Tirupati Forge Ltd
Tirupati Forge Ltd is a penny stock with a market capitalization of Rs 154 crores. The company’s shares closed at Rs 15.80 per share, up 5 percent on Friday from the previous close price.
The company’s P/E ratio is 22.12, which is lower than the industry’s P/E ratio of 36.37, indicating that the stock is trading at a lower price or the stock is undervalued.
The company shares have gained 15 percent in the last month and 77 percent in the last six months.
Tirupati Forge margins have improved with a net profit margin of 10.24 percent and an operating margin of 14.88 percent. Additionally, the company’s return on equity stood at 26.01 percent and the return on capital employed at 35.54 percent.
The company’s revenue has fallen by 11 percent year on year, from Rs 26 crore in Q2FY23 to Rs 23 crore in Q2FY24.In the same frame, net profit declined by 52 percent from Rs 3.19 crore to Rs 1.53 crore.
The company manufactures mass quantity Carbon Steel Forged Flanges, Forged components, and other automotive components.
Alacrity Securities Ltd
Alacrity Securities is a penny stock with a market capitalization of Rs 64 crores. The company’s shares closed at Rs 30.73 per share on Friday from the previous close price.
The company’s P/E ratio is 20.13, which is lower than the industry’s P/E ratio of 24.27, indicating that the stock is trading at a lower price or the stock is undervalued.
The company shares have delivered a return of 120 percent in the last six months and 133 percent in the year.
In a recent fiscal year, the company’s margins reported a net profit margin of 1.55 percent and an operating margin of 2.62 percent. Additionally, the company’s return on equity stood at 13.13 percent and the return on capital employed at 22.09 percent.
The company’s revenue has increased by 7.7 percent year on year, from Rs 116 crore in Q2FY23 to Rs 125 crore in Q2FY24. During the same period, net profit jumped by 300 percent from Rs 2 crore to Rs 8 crore.
Alacrity Securities Limited is a Stock Broking and Financial Services firm. Which is engaged in the business of retail equity broking business and proprietary trading.
Written By Omkar Chitnis
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