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How expensive are Nifty50 stocks: Companies with Discounted 5-Year P/E Ratios

13 September 20236 mins read by Angel One
Out of 50 stocks, 23 are trading at a discount compared to their 5-year P/E ratios in the market.
How expensive are Nifty50 stocks: Companies with Discounted 5-Year P/E Ratios
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Nifty50 touched a significant milestone yesterday, reaching 20,000 for the first time ever, and closed at 19,996 levels. Today, it opened at 20,110, which is 0.57% or 114 points higher than the previous day’s closing levels. As of writing this article, it is trading at 19,950 levels, experiencing some profit booking in the early morning trading session.

Today, we are going to observe the Nifty50 stocks that are trading at a Price-to-Earnings (P/E) ratio, either at a premium or a discount compared to their five-year P/E ratios with more focus on the stocks trading at a discount. Moreover, we will include companies whose EPS improved in the recent quarters compared to the corresponding quarter last year.

What is a P/E ratio?

It is a financial metric used by investors and analysts to assess the relative value of a company’s stock. It is one of the most used valuation ratios in the stock market and is calculated by dividing the current market price per share of a company’s stock by its earnings per share (EPS).

Here are the companies currently trading in the market at a discount compared to their five-year P/E ratios:

Company Name CMP Rs EPS FY23 Q1 in Rs EPS FY24 Q1 in Rs 5-Year PE (x) PE (x) Discount %
BPCL 364 -28.34 49.07 9.28 3.88 58.2%
Axis Bank 1005.1 14.26 19.78 31.17 13.56 56.5%
Bharti Airtel 893 2.73 2.89 95.63 47.03 50.8%
Tata Motors 636.45 -15.08 9.64 37.24 21.01 43.6%
State Bank of India 592.9 8.21 20.77 12.85 7.92 38.4%
Kotak Mahindra Bank 1810.4 13.88 20.88 34.11 22.05 35.4%
Dr Reddy’s Labs 5656.2 71.44 84.36 27.49 19.95 27.4%
Bajaj Finance 7430 42.88 56.77 48.54 36.43 24.9%
HDFC Bank 1633 17.25 22.12 24.43 18.69 23.5%
IndusInd Bank 1449.9 20.68 27.37 18.57 14.23 23.4%
ICICI Bank 991.5 10.62 15.2 24.18 18.62 23.0%
Eicher Motors 3404.8 22.33 33.58 37.18 28.91 22.2%
Maruti Suzuki 10503 34.3 83.59 39.83 32.71 17.9%
HUL 2516.4 10.13 10.87 66.27 57.05 13.9%
Asian Paints 3257.5 10.6 16.16 76.93 67.08 12.8%
Bajaj Finserv 1560 8.23 12.2 39.56 35.29 10.8%
Britannia Industries 4571 14.01 19 56.53 51.66 8.6%
M & M 1583 17.66 28.21 19.76 18.33 7.2%
Coal India 280 14.33 12.93 6.5 6.33 2.6%
UPL 618.4 11.68 2.21 17.3 17.07 1.3%
Infosys 1485.4 12.74 14.32 25.27 24.98 1.1%
ONGC 184.5 9.49 11.23 5.78 5.76 0.3%
Nestle India 22033 52.92 72.43 78.22 77.96 0.3%

Out of 50 stocks, 23 are trading at a discount compared to their 5-year P/E ratios. Among these 23 stocks, only two, BPCL and Tata Motors, posted negative EPS in Q1 FY23 but improved significantly, posting positive EPS in Q1 FY24. However, only Coal India and UPL Limited saw their EPS fall in the last quarter by 10% and 81%, respectively.

Here is the list of companies currently trading at a premium compared to their 5-year P/E ratios:

Company Name CMP Rs EPS FY23 Q1 in Rs EPS FY24 Q1 in Rs 5-Year PE (x) PE (x) Premium %
Tata Steel 132.2 6.36 0.52 6.17 78.83 1177.6%
JSW Steel 835.25 3.47 9.67 10.87 39.42 262.6%
Larsen & Toubro 2992.2 12.11 17.74 22.62 37.55 66.0%
NTPC 243.6 4.06 5.03 8.58 13.24 54.3%
Tech Mahindra 1271 11.64 7.1 19.23 28.28 47.1%
LTIMindtree 5527 63.06 38.92 25 36.72 46.9%
Divi’s Laboratories 3740 26.44 13.41 46.73 67.21 43.8%
UltraTech Cement 8510.1 54.87 58.49 33.51 47.53 41.8%
Hindalco Industries 489.1 18.33 10.92 9.59 13.03 35.9%
ITC 447.45 3.56 4.1 21.72 28.1 29.4%
Apollo Hospitals 5110 22.06 11.59 88.92 109.9 23.6%
Power Grid Corporation 199.4 4.09 3.87 10.18 12.21 19.9%
HCL Technologies 1280 12.1 13.02 19.28 23.01 19.3%
Grasim Industries 1862.5 29.37 23.94 15.89 18.84 18.6%
HDFC Life Insurance 667 1.71 1.94 88.73 100.7 13.5%
Titan Company 3207.2 8.84 8.48 79.36 88.48 11.5%
Bajaj Auto 4839 40.2 58.11 18.85 20.94 11.1%
Tata Consumer 866.85 2.77 3.41 63.58 70.29 10.6%
Adani Enterprises 2620.1 4.12 5.91 98.64 107.4 8.9%
Hero MotoCorp 3053.5 29.55 35.53 18.58 20.18 8.6%
Sun Pharmaceuticals Industries 1147.5 8.59 8.43 28.76 31.19 8.4%
SBI Life Insurance 1349.1 2.63 3.81 68.17 73.44 7.7%
Wipro 436.3 4.68 5.23 19.31 20.58 6.6%
Adani Ports 887 5.48 9.79 24.57 25.93 5.5%
Reliance Industries 2471.1 26.54 23.67 24.63 25.85 5.0%
Cipla 1244.1 8.51 12.33 30.04 31.27 4.1%
TCS 3495 25.9 30.26 29.06 29.25 0.7%

After observing the data above, Tata Steel and JSW Steel are trading at a premium of 1177 times and 263 times the market EPS, respectively.

Tata Steel’s EPS has decreased, while JSW Steel’s EPS improved in the recent quarter by 92% and 179%, respectively.

Market participants always try to find stocks that are trading at a lower P/E ratio compared to their historical P/E ratios. This article might help you complement your efforts in searching for low P/E stocks in the market for your investment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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