Our Terms & Conditions | Our Privacy Policy
By Ekta Sonecha Desai
In periods of swift market corrections, investors tend to examine valuation metrics to determine if stocks have gotten cheap compared to their fundamentals. One of the most common metrics is the Price-to-Earnings (P/E) ratio, which measures a company’s stock price versus its earnings per share (EPS).
A low P/E ratio may imply that a stock is cheap, but it can also reflect concerns regarding growth, profitability, or industry problems. On the other hand, high P/E stocks are often viewed as expensive due to market optimism for future earnings capacity.
A market drowning in the red offers a chance to look at stocks that are trading at lower P/E ratio. However, not every low P/E stock is an investment opportunity. Low P/E ratio could indicate that stocks may be facing structural challenges that support their low valuations.
In this study, we have taken into account stocks with positive earnings (P/E of more than zero) and a market cap of more than Rs 5,000 crore. Please note we have not considered any banking stocks.
In this article we talk about five such low P/E stocks that fit the bill.
Let’s take a closer look.
5 Low P/E Companies
Source: Screener.in
Ashoka Buildcon is engaged in the business of construction and infrastructure facilities on EPC and BOT basis. It is also involved in the sale of ready mix concrete (RMC).
Ashoka Buildcon is currently trading at a low P/E ratio of 3.9 times. It is significantly lower compared to its 5 year P/E of 10.3 times, indicating a steep discount.
IDBI Capital has set a target price of Rs 260, implying a 14% upside, factoring in debt reduction, asset monetization, and a Rs 1,64,000 crore order book. With strong earnings momentum and sectoral tailwinds, the stock’s valuation appears more reflective of market sentiment than fundamental weakness.
Great Eastern Shipping Company along with its subsidiaries is a major player in the Indian shipping and oil drilling services industry.
It is currently trading at a P/E ratio of 5.9 times which is marginally lower than 5-year median P/E of 6.9 times.
The overall analyst sentiment towards GE Shipping remains positive. The company’s attractive valuation metrics and consistent dividend payouts position it as a compelling consideration for any watchlist.
KNR Constructions, incorporated in 1995, is a Hyderabad-based infrastructure project development. The company providing EPC services in segments such as roads and highways. It is also involved in the business of irrigation and urban water infrastructure management.
It is currently trading at a P/E ratio of 5.5x which is considerably lower compared to its 5-year median P/E of 17.3 times.
Axis Securities has maintained a hold rating on the stock with a target price of Rs 255 per share, implying a 7.1% upside from the current market price. Despite near-term challenges, strong order visibility, diversification into metro projects, and robust margins indicate stable long-term growth potential according to the brokerage house.
Power Finance Corporation is a systemically important non-deposit taking NBFC registered with the RBI as an infrastructure finance company. It is engaged in extending financial assistance to the Indian power sector.
It is currently trading at a P/E ratio of 5.8 times. Its current P/E ratio is higher compared to its 5-Year media P/E of 3.1 times.
Motilal Oswal has maintained a buy rating on the stock with a target price of Rs 475, implying a 21.3% upside from the current levels. The valuation remains attractive. Its valuations are supported by healthy return ratios and expected stressed asset resolutions in Q4FY25.
LIC Housing Finance is a housing finance company registered with National Housing Bank (NHB). It is mainly engaged in financing purchase, construction of residential flats/houses to individuals, and project finance to developers, loan against property (LAP), lease rental discounting (LRD) for commercial properties as well as purchase of commercial shops/showrooms.
The company is currently trading at P/E ratio is 5.8 times which lower is compared to its 5-year P/E median of 7.3 times.
Motilal Oswal has maintained a Buy rating on the stock with a target price of Rs 690, implying a 26.5% upside from current levels. The company’s affordable housing foray, strong provisioning buffers, and stable NIMs are expected to support long-term growth.
Conclusion
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett
A low P/E ratio could make a stock look cheap, but low P/E ratio can’t be the sole factor to consider while investing. Some stocks may trade at low multiples due to underlying earnings growth, while in other cases it may be due to structural problems or headwinds facing the industry.
The stocks mentioned in this article pass simple valuation screens, but investors need to look deeper. Earnings transparency, debt, business strength, and industry trends are important considerations that decide if a stock is really a bargain or a value trap.
A thorough analysis of fundamentals is necessary before taking any investment call—because in the long term, quality is more important than a cheap price.
While corrections in the market offer possibilities, they do require caution as well. Discipline that involves adequate research, diversification, and a long-term outlook can see investors through turbulent times and assist them in taking informed choices.
After all, the correct investment is not all about locating a low P/E stock, but locating companies that have attractive valuations, sound fundamentals and offer the potential for sustainable growth.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.