CPCL, ACME Solar profit growth outpaces P/E

Chennai Petroleum's profit growth printed 999%. Sales grew 57.2%. The stock trades at a P/E of 4.72. That gives a PEG of 0.01. ACME Solar also showed 999% profit growth, with sales up 547.9% and a PEG of 0.06. Both sit far below the PEG of 1 that many fund managers treat as fair value. Both numbers come from the most recent earnings release. The 999% growth figure is a base effect. It gets printed when prior-year profit was unusually low. That is why PEG ratios can mislead. These are not the same business. NSE: CHENNPETRO is a refiner. NSE: ACMESOLAR builds and owns solar power plants. The common thread is a profit surge from a low base. That is where the uncomfortable question begins. Is the market refusing to re-rate these stocks because it sees the profit growth as one-time? Chennai Petroleum profit growth outpaces P/E by a wide margin [Chennai Petroleum Corporation](/stock/CHENNPETRO) trades at 4.72 times trailing earnings. If profit growth of 999% were repeatable, the stock would be a once-in-a-decade bargain. But refineries do not grow earnings at that rate over a full cycle. Gross refining margins spike when product supply tightens. They collapse when new capacity comes online. The 57.2% sales growth reflects higher crude prices and product realisations, not necessarily higher volumes. The PEG of 0.01 is arithmetic, not an opinion. It divides a trailing P/E by a growth rate that likely will not repeat. Investors should ask what normalised earnings per share look like once crude oil volatility settles. ACME Solar sales growth is real, but cash flow remains the test [ACME Solar Holdings](/stock/ACMESOLAR) has a different problem. The 547.9% sales growth is harder to dismiss because it shows new capacity entering revenue. Power purchase agreements provide visible cash flows, but they also carry fixed tariffs. That limits margin upside. The market may be pricing in project execution delays and high interest costs. A PEG of 0.06 on 999% profit growth sounds ...