PEG Below 0.14: Eight Indian Stocks to Watch

A PEG of 0.01 does not happen by accident. It happens when the denominator swells. Chennai Petroleum's trailing profit growth is up roughly 1,000%. That number turns a routine valuation multiple into a rounding error. A screen for PEG below 0.14 throws up eight Indian names. [Chennai Petroleum](/stock/CHENNPETRO) (NSE: CHENNPETRO) leads at 0.01. [Fedders Holding](/stock/511628) (NSE: 511628) comes next. Two renewable names, [ACME Solar](/stock/ACMESOLAR) (NSE: ACMESOLAR) and [Waaree Energies](/stock/WAAREEENER) (NSE: WAAREEENER), also make the cut. [Ventive Hospital](/stock/VENTIVE) (NSE: VENTIVE) and [Akzo Nobel India](/stock/AKZOINDIA) (NSE: AKZOINDIA) sit between 0.02 and 0.06. [Piramal Finance](/stock/PIRAMALFIN) (NSE: PIRAMALFIN) and [Tata Steel](/stock/TATASTEEL) (NSE: TATASTEEL) complete the list. This is not a normal growth-at-a-reasonable-price list. It's a screen where the denominator, profit growth, is doing all the heavy lifting. That should make you uncomfortable. PEG Below 0.14: The Raw Numbers The math is simple. PEG is price-to-earnings divided by earnings growth. A reading below 1 says growth outruns the multiple. Below 0.14 says growth is roughly seven times the multiple. That is rarely organic. Chennai Petroleum's 1,000% profit growth likely includes a low base effect, inventory gains or an exceptional item. Refining margins do not compound at that rate. [Akzo Nobel India](/stock/AKZOINDIA) has a more stable franchise but its PEG of 0.06 probably reflects a one-time earnings bump, not paint demand tripling. [Fedders Holding](/stock/511628) and [Ventive Hospital](/stock/VENTIVE) are small caps. Their PEGs of 0.02 to 0.04 can come from a single contract, a revaluation or a tax write-back. Under Ind AS, a revaluation or a one-time tax write-back flows through profit after tax. That can make a company look cheaper than it is. [Piramal Finance](/stock/PIRAMALFIN) and [Tata Steel](/stock/TATASTEEL) are cyclicals. Low PEGs in cyclicals often mark p...