Market Crash: These Nifty Stocks Fall to ‘Lowest P/E’, Show ‘Profit Jump’ in FY22

  • Stock Market Analysis

The Kangaroo market continues today with the benchmark indices delivering one-sided gains and losses every alternate day. After yesterday’s red session, today, the Nifty 50 opened on a positive note and is currently trading 1% up at 15,572 and the Sensex is up 1.03% to 52,350, by 9:52 AM IST.

After a decent correction of around 16.2% of the Nifty 50 from the all-time high of 18,604.45, many value investors are now hunting for undervalued stocks. While the index doesn’t seem to have corrected a lot, individual stocks have seen a severe cut. As these stocks have plunged significantly from their respective highs adding them to a long-term portfolio in a staggered manner might start to make sense now. 

Price-to-earnings ratio (P/E ratio) is one of the most popular metrics used to screen undervalued stocks. It simply denotes how much price the investors are willing to pay per rupee of earnings of the company. Currently, the Nifty 50 is trading at a P/E ratio of 20.43 which now seems to have come under a comfortable range as 19-20 generally remains the average. In that vein, We have shortlisted 2 high-quality stocks from the Nifty 50, which are trading at a steep discount compared to their benchmark index as well as their respective industry.

Tata Steel Limited

Without a doubt, the recent mayhem in the metal space has thrown metal stocks to their 52-week lows, including Tata Steel Ltd (NS: TISC ). While the Nifty 50 also touched a 52-week low recently, the correction from the top between them is significant. Compared to the Nifty’s 16.2% fall, Tata Steel shares are down by over 44% from the 52-week high of INR 1,534.5.

Surprisingly, the share price of this INR 1,02,362 crores big steel producer is currently trading at a P/E of a mere 2.55 which is significantly lower than the industry’s P/E of 10.66. The price-to-book value has also dropped below 1 to 0.87 which is less than half of the sector’s P/B of 2.38. To top it all, the stock is also quoting at a decent dividend yield of 2.83%.

Looking at the income statement, the company’s consolidated net income soared over an eye-popping 436% (compared to FY21) to INR 40,153.93 crores in FY22, bumping EPS from INR 62.21 in FY21 to INR 331.02 in FY22.

Oil and Natural Gas Corporation Limited

Another stock which is trading at a steep discount is Oil And Natural Gas Corporation Ltd (NS: ONGC ). The company has recently enjoyed a surge in crude oil and natural gas prices, although both of which are now retracing from their highs, the result of which is also seen in the correction of ONGC shares. The stock is down over 30% from its 52-week high of INR 194.95, but nowhere close to its 52-week low due to its strong demand.

The company has a market capitalization of INR 1,69,648 crores and its shares are trading at a P/E of a mere 3.73, compared to the sector’s P/E of 13.08. The Price-to-book ratio is also trading at less than 1, at 0.7, while its peers are trading at an average P/B ratio of 1.66. It is also a regular dividend-paying company and currently quotes at a yield of a mouth-watering 7.79%.

The consolidated net income for FY22 had seen a massive jump of over 180% to INR 45,522.11 crores, leading to an EPS jump to INR 36.19, compared to INR 12.92 in FY21. 

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  • Shaji Mathew @Shaji Mathew
    Tata steel was 495/- in Jan 2020, before pandemic and crashed to 274/- in Mar 2020. There is nothing great to consider these stocks being trading at 52 week low now. Should not be surprised if it falls below 300/-. This is same for ONGC also.
    Like 1
  • kadar supermarket @kadar supermarket
    dear, ongc is a single company not two ...this speaks a lot about how the stk market crash effecting ur brain
    Like 1
  • Aayush Khanna/ @Aayush Khanna/
    Inconvenience is regretted.  The article is meant for two high-quality Nifty stocks not three.
    Like 1
  • Prgp Ind @Prgp Ind
    Where is the 3rd stock
    Like 3
  • Prgp Ind @Prgp Ind
    Where is the 3rd stock?
    Like 2
  • Prgp Ind @Prgp Ind
    Where is the 3rd stock?
    Like 2
  • Yatin NN @Yatin NN
    Where is 3rd one ?? 🤔🤔
    Like 0

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