Value buys? These 20 Nifty stocks trading below 10-year PEs

NEW DELHI: While valuations on Dalal Street have fallen in line with 5-year and 10-year historical averages following a rangebound trade over the last two years, analysts believe they have still not fallen to levels that give investors comfort to put money aggressively. That said, nearly half of index stocks are below their 10-year averages and can offer decent returns to investors.

Trendlyne data suggests these 20 stocks have 5-35% upside scope and hold to strong buy ratings from analysts.

For UPL, analysts have an average target upside of 35%. Out of 23 calls on the stock, 17 have strong buy ratings, 3 buy ratings, 2 hold calls and one sell call. UPL has a 12-month trailing PE of 14.03 times vs 10-year average PE of 17.32 times.

Brokerage Prabhudas Lilladher recently slashed the FY24E/25E estimates for UPL by 16%/12% and target multiple from 14x earlier to 12x currently, to factor in subdued growth and margin outlook in the near term. It, however, maintained a BUY post the earnings show at a target of Rs 850.


As for Hindalco, its TTM PE stands at 7.92 times currently against the 10-year average of 12.52 times. The stock, which declared its Q4 earnings on Wednesday, has 14 strong buy out of 20 recommendations and no sell calls. It has an average upside scope of 30%, Trendlyne data further suggests.

HDFC Bank, SBI, Axis Bank and M&M are also below their 10-year average while they have an upside scope of over 20% each in the next 12 months. This is when these stocks have gained 20-37% in the last one year already.

HDFC Bank's counterpart HDFC is also trailing its 10-year average PE of 20.17 times as stock trades at 19.11 times. With the merger between the two entities just 4-5 weeks away, analysts on Thursday said the move would result in a lower net interest margin (NIM) for the lender this year.

The bank expects NIM - a key profitability measure - to fall to 3.7%-3.8% in 2023-24 from 4.1% a year ago due to the merger, Nomura analysts wrote in a report.

NTPC, Apollo Hospitals, IndusInd Bank, Cipla, Bharti Airtel, Kotak Mahindra Bank, Dr. Reddy's Labs and ONGC are among companies that are trading at a PE multiple of below their historical average. Analysts expect them to give gains in the high to mid-teens.

(Data Inputs: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of Economic Times)