Investing in power stocks with a Price-to-Earnings (P/E) ratio below the industry average can present attractive opportunities for value investors. A lower P/E suggests that these stocks may be undervalued compared to their peers, potentially offering higher returns. However, it is essential to analyze underlying factors affecting these valuations to ensure informed investment decisions.
1. Adani Power Limited
Adani Power Limited, a subsidiary of the Adani Group is one of India’s largest private thermal power producers with a capacity of 15,250 MW. The company operates several thermal power plants across multiple states and has also entered into solar energy. Adani Power focuses on energy solutions and long-term power purchase agreements that aim to improve energy security and support economic growth.
The company has a P/E ratio of 18.0 which is less than the Industry Average of 36. In Q2 FY25 Adani Power reported a 2.67 percent year-over-year increase in revenue from operations to Rs.13,339 crore and a 49.98 percent decrease in net profit to Rs.6,594 crore, in the same period.
In Friday’s trading session, the company’s share price closed at Rs.590.70 per share, a 1.48 percent down from its previous close.
2. NTPC Limited
NTPC Limited, formerly known as National Thermal Power Corporation, is one of India’s largest power utility companies, with an installed capacity of over 76,000 MW. It was established in 1975, NTPC generates electricity from coal, gas, hydro, and renewable sources. The company focuses on efficient power generation and aims to expand its capacity to 130 GW by 2032.
The company has a P/E ratio of 17.5 which is less than the Industry Average of 36. In Q2 FY25, NTPC Limited reported a 0.63 percent year-over-year increase in revenue from operations to Rs.44,696 crore and a 13.83 percent increase in net profit to Rs.5,380 crore, in the same period.
In Friday’s trading session, the company’s share price closed at Rs.397.70 per share, a 1.56 percent down from its previous close.
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3. NHPC Limited
NHPC Limited, (National Hydro Electric Power Corporation), is a leading Indian public sector enterprise focused on hydroelectric power generation. Established in 1975, NHPC develops and operates hydro, wind, and solar power projects. The company aims to improve India’s energy capacity through sustainable practices and currently has an installed capacity of over 7,144 MW, including several ongoing projects.
The company has a P/E ratio of 27.8 which is less than the Industry Average of 36. In Q1 FY25, NHPC Limited reported a 2.28 percent year-over-year decline in revenue from operations to Rs.2,694 crore and a 1.18 percent increase in net profit to Rs.1,108 crore, in the same period.
In Friday’s trading session, the company’s share price closed at Rs.82.33 per share, a 2.60 percent up from its previous close.
Written by Santhosh
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