PEG Screen: Profit Growth Outpaces P/E in Energy

India's energy and materials trade is throwing off a strange signal: profit growth is running far ahead of what investors are paying for it. The PEG screen: profit growth outpacing earnings multiples shows several NSE names with ratios below 0.15. That means reported profit growth is at least six times the P/E multiple. On paper, it's a bargain hunter's dream. On closer inspection, it's a test of how much you trust reported earnings. The screen flags [Chennai Petroleum](/stock/CHENNPETRO) (NSE: CHENNPETRO), [ACME Solar](/stock/ACMESOLAR) (NSE: ACMESOLAR), [Waaree Energies](/stock/WAAREEENER) (NSE: WAAREEENER), [Tata Steel](/stock/TATASTEEL) (NSE: TATASTEEL), [Akzo Nobel India](/stock/AKZOINDIA) (NSE: AKZOINDIA), [Ventive Hospitality](/stock/VENTIVE) (NSE: VENTIVE), and [Piramal Finance](/stock/PIRAMALFIN) (NSE: PIRAMALFIN). Energy and materials dominate the list. A hospitality play and an NBFC sit in the same bucket. That should bother you. PEG Screen: Profit Growth Outpacing Multiples in India Take the arithmetic. Chennai Petroleum trades near 6.2 times trailing earnings. The screen's reported profit growth for the trailing year is roughly 197%. Divide 6.2 by 197 and you get a PEG of 0.031. ACME Solar carries a P/E near 43. Its reported profit growth is around 315%. PEG: 0.14. Waaree Energies shows a P/E near 52 with profit growth near 365%, a PEG of 0.14. Tata Steel's P/E of about 18 and reported profit growth of 160% put its PEG at 0.11. These numbers are extreme. The screen is telling you the market pays less per unit of growth than at almost any point in recent memory. But does that growth belong to operations or to one-offs? Akzo Nobel India's P/E is near 34 with profit growth of 41%. That would not normally make the cut. Its inclusion suggests the screen is using a different growth window or adjusted earnings. Ventive Hospitality's low PEG likely reflects a recent listing with IPO-related accounting gains, not repeatable operating strength. Piramal Finan...