Coal India, Tata Steel, Sun Pharma: Nifty shares trading at huge discount to 10-year average PEs

While the NSE benchmark Nifty is close to its all-time high levels, half of the index constituents including Coal India, Tata Steel, Sun Pharma and ONGC are trading at valuations that are at steep discount to their 10-year averages. Some of these stocks have price targets that suggest potential upside ahead.

In the case of ONGC, the oil refiner trades at 3.6 times its trailing 12-month earnings per share (EPS) compared with a 10-year average PE of 8.3 times, suggesting a discount of 56 per cent. The average target price of Rs 187 for ONGC, as suggested by Trendlyne, suggest a 20 per cent potential upside.

Tata Steel at 9.3 times its trailing 12-month EPS stood at a 52 per cent per cent discount to a 10-year average of 19.4 times. The average target price of Rs 127 on this stock suggests 16 per cent potential upside.

Coal India, which recently concluded its offer for sale (OFS), traded at a 33 per cent discount to historical PE average. Its PE stood at 7.3 times at the end of May against an average of 10.9 times for the 10-year period. Coal India shares can see 11 per cent upside potential, the average target price of Rs 255 on the stock suggests.

Apollo Hospitals and Dr Reddy's Labs trade at discounts of 29 per cent and 28 per cent, respectively. Dr Reddy's Labs has an average price target of Rs 4,968, which suggests 8 per cent potential upside ahead. Target for Apollo Hospitals at Rs 5,238 also suggests a similar potential return ahead.

None of banking, financial and insurance stocks in the Nifty pack traded at a discount to its historical price-to-book value. Also, none of the IT stocks was trading at discount to historical PE average.

 

 

Auto stocks such as Eicher Motors (discount 19 per cent), Hero MotoCorp (discount 16 per cent), Maruti Suzuki (discount 11 per cent) and Mahindra & Mahindra (discount 10 per cent) traded at discount to historical averages. Cement maker UltraTech Cement (2 per cent discount) and healthcare companies Apollo Hospitals (29 per cent discount), Sun Pharma (21 per cent discount), Cipla (20 per cent discount) traded at discount to historical averages.  

JSW Steel (28 per cent) and Hindalco (10 per cent) were among metals companies trading at discount. UPL traded at 20 per cent discount to its historical PE of 12.8 times.  

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