One of the effective methods for assessing whether a stock is undervalued or overvalued is by analysing key metrics such as the Price-to-Earnings (P/E) ratio and the industry P/E average.
The P/E ratio or Price-to-Earnings ratio compares the current share price to the earnings per share (EPS) of a company, serving as a widely recognised indicator for determining the value of a stock.
When a company’s P/E ratio is significantly higher than the industry average, it may indicate that the stock is overvalued, as investors are paying a premium for its earnings. Conversely, a substantially lower P/E ratio relative to the industry average could indicate that the stock is undervalued, potentially signalling a buying opportunity.
Here is the list of stocks to look out for
Suzlon Energy Ltd
Suzlon Energy is one of India’s leading renewable energy companies, primarily engaged in the design, development, and manufacturing of wind turbines. It provides end-to-end wind power solutions, including project execution, operations, and maintenance. The company has played a major role in promoting sustainable energy in India and other global markets.
With a market capitalization of Rs. 74,684 Crores, the shares of Suzlon Energy Ltd closed at Rs. 54.48, down by 1.30 percent from its previous day’s close price of Rs. 55.20.
The stock has a P/E ratio of 35.9, which is lower than the industry average of 49.0, indicating that the stock may be undervalued. Additionally, it has a strong ROCE of 32.5 percent, a high ROE of 41.4 percent, and a very low debt-to-equity ratio of 0.05, reflecting efficient management and a healthy financial position.
NMDC Ltd
National Mineral Development Corporation (NMDC) is a government-owned mining company and India’s largest iron ore producer. It operates major mines in Chhattisgarh and Karnataka and also engages in the exploration of other minerals like copper, rock phosphate, and diamonds. NMDC plays a critical role in supplying raw material to India’s steel industry.
With a market capitalization of Rs. 67,828 Crores, the shares of NMDC Ltd closed at Rs. 77.15 , up by 1.33 percent from its previous day’s close price of Rs. 76.14.
The stock has a P/E ratio of 10.2, which is lower than the industry average of 22.4, indicating that the stock may be undervalued. Additionally, it has a strong ROCE of 29.6 percent, a high ROE of 23.6 percent, and a very low debt-to-equity ratio of 0.14, reflecting efficient management and a healthy financial position.
BCL Industries Ltd
BCL Industries operates in multiple sectors, including edible oils, distillery products, and real estate. It is known for its manufacturing of ethanol and other biofuels, contributing to India’s growing demand for alternative energy. The company also produces vanaspati, refined oils, and other agro-based products. It integrated operations and diversified revenue streams to provide a stable business foundation.
With a market capitalization of Rs. 1,222 Crores, the shares of BCL Industries Ltd closed at Rs. 41.41 , down by 1.22 percent from its previous day’s close price of Rs. 41.92.
The stock has a P/E ratio of 12.0, which is lower than the industry average of 32.1, indicating that the stock may be undervalued. Additionally, it has a ROCE of 13.2 percent, a ROE of 13.0 percent, and a very low debt-to-equity ratio of 0.67.
NHPC Ltd
NHPC (National Hydroelectric Power Corporation) is a central public sector undertaking involved in the generation of hydroelectric power in India. It is one of the largest hydropower companies in the country, with additional ventures into solar and wind energy. It plays a vital role in India’s renewable energy mission by utilizing the country’s vast water resources. The company maintains a strong operational and financial position, backed by government support. With a market capitalization of Rs. 87,301 Crores, the shares of NHPC Ltd closed at Rs. 86.91 , up by 0.58 percent from its previous day’s close price of Rs. 86.41.
The stock has a P/E ratio of 28.4, which is lower than the industry average of 28.5, indicating that the stock may be undervalued. Additionally, it has a ROCE of 7.42 percent, a ROE of 7.53 percent..
Sagility Ltd
Sagility Ltd is a business process management (BPM) company that offers healthcare-focused outsourcing solutions. Formerly part of HGS (Hinduja Global Solutions), it focuses on enhancing operational efficiency for healthcare providers, payers, and related stakeholders. Its services include claims processing, patient engagement, and analytics. With a global delivery model, Sagility supports clients mainly in North America and leverages technology to improve healthcare outcomes. With a market capitalization of Rs. 20,349 Crores, the shares of Sagility Ltd closed at Rs. 43.47, down by 0.07 percent from its previous day’s close price of Rs. 43.50.
The stock has a P/E ratio of 30.6, which is lower than the industry average of 33.1, indicating that the stock may be undervalued. Additionally, it has a ROCE of 9.58 percent, a ROE of 7.38 percent, and a very low debt-to-equity ratio of 0.17.
Written by Sridhar J
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