The price-to-book (P/B) ratio is a financial metric that compares a company’s current market value and book value. It is determined by dividing a company’s stock price by its book value per share.
A price-to-book ratio of less than one could indicate that the stock is undervalued and worth buying. A price-to-book ratio greater than one indicates that the stock is trading at a premium to the company’s book value.
Here are four stocks with price-to-book value less than one.
Gujarat State Fertilizers & Chemicals
Gujarat State Fertilizers & Chemicals Ltd, established in 1962, is a public-sector company backed by the Gujarat government. It manufactures a variety of fertilizers and industrial products such as plastics, synthetic rubbers, and man-made fibers.
In comparison to its competitors, the company has a low price-to-book value of 0.96 and a low price-to-earnings ratio of 10. Additionally, the company is debt-free, with a return on equity ratio of 10%, a return on capital employed of 13%, and a net profit margin of 11%
Gujarat State Fertilizers & Chemicals net revenue increased by 25% year over year, from ₹2,405 crore in Q2FY23 to ₹3,017 crore in Q2FY24. The company’s net profit dropped by 1.3% year over year, from ₹ 289 crores in Q2FY23 to ₹285 crores in Q2FY24.
The share price of the company has risen by 68 % in the last six months and 110 % in the last year. For example, if an investor invested ₹ 1 lakh a year ago the current value would be ₹ 2.1 Lakhs.
On Friday, the share price of the company closed 5% up at ₹297.30 per share from its previous close of ₹283.15 with a market capitalization of ₹ 11,840 crores.
Steel Authority Of India
Steel Authority of India Limited (SAIL) is one of India’s largest steel producers and a Maharatna among the country’s Central Public Sector Enterprises.
The company has a low price-to-book value of 0.87, a low price-to-earnings ratio of 14 when compared to its peers, a low debt-to-equity ratio of 0.56, and a 1.2% dividend yield.
Looking at their financials, the net revenue increased by 13% year over year, from ₹26,246 crore in Q2FY23 to ₹29,712 crore in Q2FY24. The company’s net profit rose by 496% year over year, from a net loss of ₹329 crores in Q2FY23 to a net profit of ₹1,306 crores in Q2FY24.
Steel Authority of India Limited (SAIL) is a mid-cap company with a market capitalization of ₹46,720 crores, the share price of the company rose by 25 % in the last six months.
The share price of the company closed 0.84% up at ₹114.05 per share from its previous close of ₹113.10 per share on Friday.
Sunflag Iron And Steel Company Ltd
Sunflag Iron & Steel Company Ltd is a subsidiary of the Sunflag Group. The company began operations in 1989 as a spring steel producer, but it now manufactures mild steel and alloy steel products such as carbon steel, free and semi-free cutting steel, and so on.
The company’s price-to-book value is 0.85, with a low debt-to-equity ratio of 0.18, a return on equity of 10%, a return on capital employed of 13%, and a net profit margin of 6%.
Net revenue of the company decreased by 3% year over year, from ₹886 crore in Q2FY23 to ₹858 crore in Q2FY24. The company’s net profit fell by 58% year over year, from ₹95 crores in Q2FY23 to ₹39 crores in Q2FY24.
With a market capitalization of ₹3,970 crores, it is a small-cap, and the share price of the company rose by 74 % in the last year.
Sunflag Iron And Steel Company’s share price closed 1.5% down at ₹220.30 per share from its previous close of ₹223.75 per share on Friday.
Vindhya Telelinks Ltd
Vindhya Telelinks Ltd is engaged in the manufacturing and sale of Cables (comprising telecommunication cables, other types of wires & cables, FRP rods/ glass rovings, etc.) and Engineering, Procurement & Construction (EPC) business.
The company has a price-to-book value of 0.78, a low price-to-earnings ratio of 11, and a low debt-to-equity ratio of 0.2, with debtor days reduced from 202 to 129.
Looking at their financials, the net revenue increased by 50% year over year, from ₹573 crore in Q2FY23 to ₹862 crore in Q2FY24. The company’s net profit rose by 161% year over year, from ₹18 crores in Q2FY23 to ₹47 crores in Q2FY24.
Vindhya Telelinks is a small-cap company with a market capitalization of ₹2,800 crores, the share price of the company rose 43% in the last year.
On Friday, the share price of the company was up by 1.81% at ₹2,399 per share from its previous close of ₹2,356.25 per share.
Written by Sriram KV
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