The Price-to-Earnings (P/E) Ratio is a widely used financial metric that helps investors assess the valuation of a company’s stock. It measures the relationship between a company’s current share price and its earnings per share (EPS). The P/E ratio is often used to evaluate whether a stock is overvalued, undervalued, or fairly priced relative to its earnings.
This ratio helps investors determine how much they are willing to pay for a company’s earnings, offering insight into whether a stock is overvalued or undervalued. A high P/E ratio may indicate that investors expect future growth and are willing to pay a premium for the stock, while a low P/E ratio could suggest that the stock is undervalued or that the company is underperforming.
The stocks to watch out for are listed below
Varun Beverages Ltd
Varun Beverages is one of the largest franchisees of PepsiCo globally (outside the U.S.), responsible for bottling and distributing PepsiCo beverages across India and several international markets. Its product portfolio includes carbonated soft drinks, juices, snacks, and bottled water. The company has a strong distribution network and benefits from rising demand for branded non-alcoholic beverages.
The stock has a current P/E ratio of 52.7, compared to its 5-year median P/E of 64.7, suggesting it may be trading below its historical valuation. It shows strong profitability with a Return on Capital Employed (ROCE) of 24.8% and Return on Equity (ROE) of 22.5%. Additionally, its debt-to-equity ratio is low at 0.12, showing that the company has a strong financial position and doesn’t rely much on debt.
Waaree Renewable Technologies Ltd
Waaree Renewable Technologies is a part of the Waaree Group and is involved in providing engineering, procurement, and construction (EPC) services for solar power projects. The company focuses on utility-scale solar installations and also operates in the solar asset ownership space. It benefits from India’s strong push toward renewable energy and clean power transition.
The stock has a current P/E ratio of 37.5, compared to its 5-year median P/E of 46.7, suggesting it may be trading below its historical valuation. It shows strong profitability with a Return on Capital Employed (ROCE) of 82.1% and Return on Equity (ROE) of 65.4%. Additionally, its debt-to-equity ratio is low at 0.06, showing that the company has a strong financial position and doesn’t rely much on debt.
Shakti Pumps (India) Ltd
Shakti Pumps is a leading Indian manufacturer of energy-efficient stainless steel pumps and motors, serving both domestic and international markets. It provides solutions for agriculture, industrial, and solar pumping applications, and is especially known for solar-powered water pumping systems. The company benefits from government subsidies and initiatives like PM-KUSUM.
The stock has a current P/E ratio of 24.6, compared to its 5-year median P/E of 25.5, suggesting it may be trading below its historical valuation. It shows strong profitability with a Return on Capital Employed (ROCE) of 55.3% and Return on Equity (ROE) of 42.6%. Additionally, its debt-to-equity ratio is low at 0.15, showing that the company has a strong financial position and doesn’t rely much on debt.
KPI Green Energy Ltd
KPI Green Energy Ltd is a renewable energy company focused on the development, ownership, operation, and maintenance of solar power projects. It operates under two business verticals: Independent Power Producer (IPP) and Captive Power Producer (CPP), catering to both commercial and industrial clients.
The stock has a current P/E ratio of 24.7, compared to its 5-year median P/E of 25.6, suggesting it may be trading below its historical valuation. It shows strong profitability with a Return on Capital Employed (ROCE) of 17.5% and Return on Equity (ROE) of 19.7%. Additionally, its debt-to-equity ratio is low at 0.61, showing that the company has a strong financial position and doesn’t rely much on debt.
Page Industries Ltd
Page Industries is the exclusive licensee of Jockey (innerwear and athleisure brand) in India, Sri Lanka, Bangladesh, and Nepal. It also holds the exclusive license for Speedo swimwear in India. The company is a market leader in premium innerwear and has built strong brand equity through quality, distribution, and advertising, and it benefits from the rising demand for organised branded apparel in India.
The stock has a current P/E ratio of 61.4, compared to its 5-year median P/E of 81.9, suggesting it may be trading below its historical valuation. It shows strong profitability with a Return on Capital Employed (ROCE) of 59.4% and Return on Equity (ROE) of 48.5%. Additionally, its debt-to-equity ratio is low at 0.19, showing that the company has a strong financial position and doesn’t rely much on debt.
Written by Sridhar J
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