List of Low PE Ratio Stocks in India 2025

A low PE ratio suggests a stock may be undervalued, indicating potential future price growth, making it a helpful tool for investment decisions.
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List of Low PE Ratio Stocks in India 2024
OPEN ACCOUNT
3 mins read
14-February-2025

A low PE ratio means a stock’s price is low compared to its earnings, often making it seem undervalued. Investing in such stocks can help you find companies with growth potential and the chance for higher returns over time. Low PE ratio stocks may also provide a safety cushion during tough market conditions.

List of the low PE ratio stocks in India (2025)

Name

Market cap (in Rs.)

Tata Steel Ltd

1,67,621.60

Oil and Natural Gas Corporation Ltd

3,25,200.20

Coal India Ltd

2,35,940.10

Tata Motors Ltd

2,38,328.70

IndusInd Bank Ltd

82,595.31

Axis Bank Ltd

3,12,762.20

Shriram Finance Ltd

21,469.04

Canara Bank ltd

17,384.81

Indian Oil Corporation Ltd

1,74,774.90

Bank of Baroda Ltd

1,13,780.30

Power Finance Corporation Ltd

1,36,162.20

Bharat Petroleum Corporation Ltd

56,643.79

State Bank of India

6,83,669.90

Hindalco Industries Ltd

1,33,731.10


Disclaimer: The market capitalisation values mentioned above were fetched on 14th February 2025. These values are subject to change based on various factors such as market conditions, company performance, and economic trends. Please refer to the SEBI or stock exchanges' websites to obtain the most current market capitalisation for any particular stock.

Overview of Low PE Ratio Stocks

Low PE stocks are often considered favourable for investments. They offer value for money to investors and help them maximise their portfolio returns. Let’s see some good PE ratio stocks for value investing:

1. Oil and Natural Gas Corporation Ltd.

  • Oil and Natural Gas Corporation Ltd (ONGC) is a large-cap company operating in the Oil Drilling and Exploration sector.
  • The company is headquartered in Dehradun, India, and was founded on 14 August 1956.
  • It has a significant presence in the Indian domestic production of:
    • Crude oil and
    • Natural gas
    • ONGC sells products to oil refining and gas marketing companies.

2. State Bank of India

  • State Bank of India (SBI) is a Mumbai-headquartered Indian multinational public sector bank.
  • It is the largest Indian bank with a significant market share.
  • Additionally, SBI has expanded its business operations through various subsidiaries, including
    • SBI General Insurance
    • SBI Life Insurance
    • SBI Mutual Fund, and
    • SBI Card.
  • The bank has a rich heritage of over 200 years and is considered the most trusted bank in India.

3. UPL Ltd.

  • United Phosphorus Limited (UPL) is an Indian multinational corporation.
  • It is engaged in the manufacturing and marketing of a diverse range of products including:
    • Agrochemicals
    • Industrial chemicals
    • Chemical intermediates, and
    • Specialty chemicals.
  • The company is headquartered in Mumbai and sells products in over 150 countries.

4. Hindalco Industries Ltd.

  • Hindalco Industries Limited is an Indian company specialising in the manufacturing of aluminium and copper products.
  • The company operates globally and is even listed on the Luxembourg Stock Exchange for its Global depository receipts.
  • It is headquartered in Mumbai and is a subsidiary of the Aditya Birla Group.
  • Hindalco Industries Limited is a major player in the metals industry, producing primary aluminium and copper products.
  • The company also gained recognition as the world's most sustainable aluminium company by the Dow Jones Sustainability Indices in 2020 and 2021.

5. Power Grid Corporation of India Ltd.

  • The Power Grid Corporation of India Ltd. operates as a central public sector entity, falling under the ownership of the Indian government's Ministry of Power.
  • It is primarily engaged in the transmission of bulk power across different states of India,
  • The company was incorporated on October 23, 1989, and transmits approximately 50% of the total power generated in India through its extensive transmission network.

Tata Steel Ltd

  • One of India’s largest integrated steel producers with a strong global presence.
  • Benefiting from rising infrastructure and construction demand.
  • Strong cost efficiencies and vertical integration support long-term profitability.
  • Expansion into high-margin value-added steel products enhances future growth prospects.

Coal India Ltd

  • World’s largest coal producer with a near-monopoly in India’s coal mining sector.
  • Consistent dividend payouts make it attractive for income investors.
  • Rising domestic energy demand supports stable revenue streams.
  • Plans for diversification into clean energy and coal gasification to drive long-term growth.

IndusInd Bank Ltd

  • Leading private sector bank with a diversified lending portfolio across retail, corporate, and SME segments.
  • Strong digital banking initiatives enhance operational efficiency.
  • Improving loan book growth and focus on retail lending support earnings potential.
  • Consistently improving capital adequacy ratios and profitability metrics.

Note: It is crucial that you do your due diligence before investing to understand the market risks.

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What are low PE ratio stocks?

Low PE (Price-to-Earnings) ratio stocks are those trading at a lower valuation relative to their earnings. A low PE ratio suggests that a stock may be undervalued, making it attractive to value investors seeking growth potential. It can indicate strong fundamentals, market pessimism, or industry-specific challenges. However, a low PE alone does not guarantee profitability; investors should assess financial health, growth prospects, and market conditions before investing. Such stocks are often found in cyclical industries, banking, and commodity sectors.

How to calculate low PE ratio shares?

Calculating the PE (Price-to-Earnings) ratio helps investors determine if a stock is undervalued. The PE ratio is derived by dividing the current market price of a stock by its earnings per share (EPS). A lower PE ratio indicates a potentially undervalued stock, but investors must analyse other financial metrics before making decisions. Here’s how to calculate and identify low PE ratio shares:

  • Determine the stock price – Check the latest market price of the stock from a reliable financial platform.
  • Find the earnings per share (EPS) – EPS is calculated by dividing the company’s net profit by the total number of outstanding shares.
  • Calculate the PE ratio – Use the formula: PE Ratio = Market Price / EPS.
  • Compare with industry peers – A low PE ratio compared to sector averages can indicate undervaluation.
  • Analyse financial health – Check revenue growth, debt levels, and profitability to ensure the stock is fundamentally strong.

A low PE ratio alone is not enough; investors should consider market trends, economic conditions, and industry outlook before making investment decisions.

For example:

Say the current market price of a listed company is Rs. 150, whereas its EPS is Rs. 25. The PE ratio of this company would be 6 times (Rs. 150 / Rs 25). It implies that investors are willing to pay six times the company's annual earnings to buy each share.

How is the PE ratio used in stock investing?

PE ratio indicates whether a stock is:

  • Overvalued
  • Undervalued, or
  • Fairly valued

See the table below to understand how this assessment is made:

Overvalued Undervalued Fairly valued or low PE stocks
An overvalued stock has a high P/E ratio compared to its peers or historical averages. Undervalued stocks have low P/E ratios relative to their peers or historical averages. A fairly valued stock has a P/E ratio in line with industry norms or historical averages.

 

Why invest in low PE ratio stocks?

Low P/E ratio stocks represent undervalued assets and are favoured by value investors. It indicates that:

  • The stock is trading at a discount relative to its earnings potential
  • Investors have an opportunity to buy quality companies at a lower price\

Investors who hold positions in low PE stocks often benefit when:

  • The market recognises the undervaluation and
  • Revalues the stock upwards

This helps in capitalising on capital appreciation as the stock price increases to reflect its true value and generates higher returns.

Furthermore, some low P/E ratio stocks offer attractive dividend yields. Companies with stable earnings and strong cash flows choose to return capital to shareholders in the form of dividends. Thus, investing in these stocks not only provides the potential for capital appreciation but also offers regular income through dividends.

Strategies for identifying low PE ratio stocks

Following are tips and strategies for identifying low PE ratio stocks:

1. Use stock screeners

Stock screeners are online tools that allow investors to efficiently filter and identify stocks based on specific criteria, such as the price-to-earnings (PE) ratio. By applying filters, investors can quickly find shares with low PE ratios, enabling them to discover opportunities like undervalued stocks with potential for growth. These tools streamline the process of locating low PE, high-growth stocks or shares with attractive valuations.

2. Analyse company financial statements

A thorough review of a company's financial documents—such as the balance sheet and income statement—can provide insights into its earnings and current valuation. By manually calculating the PE ratio, investors can identify companies trading at a lower valuation relative to their earnings, highlighting potential opportunities among low PE ratio stocks.

3. Look for undervalued stocks

Fundamental analysis and valuation techniques can help uncover undervalued stocks with low PE ratios. Investors should evaluate intrinsic values, earnings potential, and other metrics to determine if such stocks are priced below their true worth. This approach is particularly valuable in markets like India, where low PE stocks may be overlooked or undervalued.

4. Consider investing in index funds or ETFs

For investors seeking diversified exposure to low PE ratio stocks, index funds and Exchange-Traded Funds (ETFs) are an effective option. Certain ETFs track indices like the Nifty Low Volatility 50 Index, which includes low-volatility stocks with reasonable PE ratios. These funds often incorporate public sector undertaking (PSU) stocks, offering access to stable and undervalued investments with lower PE ratios.

While these strategies are useful, investors must undertake thorough research or consult a financial advisor to make informed investment decisions.

Features of low PE stocks in India

Following are the key features of low PE stocks in India:

1. Value proposition

Low PE ratio stocks generally indicate companies trading at a lower valuation compared to their earnings, offering an attractive opportunity for value investors. Such stocks may represent assets that are undervalued relative to their intrinsic worth, particularly for those looking for low PE, high-growth investments.

2. Risk and volatility

While low PE ratio stocks can offer significant opportunities, they may also carry higher risk and price volatility. Investors should assess their risk tolerance and evaluate the likelihood of price fluctuations before committing to such stocks.

3. Market sentiment and perception

A low PE ratio can reflect prevailing market sentiment or challenges faced by a company. Understanding the underlying reasons, such as temporary setbacks, sector dynamics, or market trends, is critical for determining whether the stock is genuinely undervalued or signals deeper issues.

4. Dividend yields

Some low PE ratio stocks provide attractive dividend yields, making them appealing to income-focused investors. Evaluating a company's dividend history and policies can help determine whether these stocks align with income-generating investment goals.

5. Sector dynamics

The nature of low PE ratio stocks often varies by sector. For instance, certain industries may consistently exhibit lower PE ratios due to their growth trajectories or market conditions. Assessing broader economic and industry trends is essential for understanding and contextualising the significance of a low PE ratio within a specific sector.

By recognising these features, investors can better evaluate opportunities presented by low PE ratio stocks while aligning their decisions with financial goals and risk preferences.

Why are low PE ratio shares popular?

Low PE ratio shares are favoured by investors because they often indicate undervaluation, offering potential for strong returns. These stocks are considered attractive for long-term investment as they provide opportunities to buy quality businesses at lower prices. Here is why they are popular:

  • Value investing appeal – Many investors seek undervalued stocks with strong fundamentals, expecting future price appreciation.
  • Potential for high returns – Stocks with low PE ratios may experience a price correction when market sentiment improves.
  • Lower risk of overvaluation – Unlike high PE stocks, these shares are less likely to be overpriced or speculative.
  • Stronger dividend yields – Many low PE stocks belong to established companies with steady earnings, offering good dividend payouts.
  • Sector-specific advantages – Cyclical industries, banking, and commodities often have lower PE ratios, attracting sector-focused investors.

Despite their popularity, investors must assess financial health, business growth, and industry trends before investing in low PE ratio stocks.

Conclusion

Profit-to-equity (PE) ratio is the relationship between the current market price of the share and its earnings per share (EPS). Low PE stocks are often considered attractive investments as they offer capital appreciation opportunities to investors. Some popular low PE stocks in India are Oil and Natural Gas Corporation Ltd., Coal India Ltd., State Bank of India, UPL Ltd., Hindalco Industries Ltd., and Power Grid Corporation of India Ltd.

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Frequently asked questions

Is 5 a good PE ratio?

A PE ratio of 5 is considered low and may indicate an undervalued stock. However, it depends on the industry, company fundamentals, and market conditions. Some stocks have a low PE due to declining earnings or poor growth prospects, so thorough analysis is essential.

Which stocks under 10 have a good PE ratio?

Stocks with a PE ratio under 10 that are considered good include those with strong financials, steady growth, and a solid industry position. Examples in India often include companies from the banking, steel, and energy sectors. Investors should compare them against industry averages and assess future growth potential.

Is a low PE good for making stock investments?

A low PE ratio suggests undervaluation and potential for capital appreciation. It allows investors to buy quality stocks at relatively low prices. However, a low PE alone is not enough; evaluating financial stability, earnings growth, and industry trends is crucial for making informed investment decisions.

How to calculate PE?

The Price-to-Earnings (PE) ratio is calculated using the formula:

PE Ratio = Market Price per Share / Earnings per Share (EPS)

It helps investors assess a stock’s valuation compared to its earnings. A lower PE may indicate undervaluation, while a higher PE could suggest growth expectations or overvaluation.

How can I invest in low PE stocks?

To invest in low P/E (Price-to-Earnings) stocks, start by identifying companies with a lower P/E ratio, as these may be undervalued and have growth potential. However, it is essential to thoroughly research and analyse these stocks to ensure that the low P/E ratio does not signal hidden issues within the company. Carefully examining factors like financial health, industry conditions, and market trends can help you make informed decisions.

Is it a good time to invest in low PE stocks?

Investing in low PE stocks can be beneficial if market conditions support future growth. While a low PE suggests an undervalued stock, external factors such as economic cycles, interest rates, and industry trends should be considered. Market timing and thorough research are key to maximising returns.

Can low PE stocks be profitable for investors?

Low PE stocks can be profitable, especially for value investors seeking stable returns and lower risk. These stocks often perform well in volatile markets. However, not all low PE stocks are good investments—analysing earnings consistency, future prospects, and industry performance is essential for success.

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