Value zone

Stocks quoting below their five-year average PE and reporting sustained improvement in financials warrant attention

- Sachin Dabhade

Signs of stability are emerging in local stock markets after a highly lukewarm performance in the first quarter of the year 2026 when the headline Nifty50 index melted around 14.50%. This was one of the worst quarterly showings for the index and was primarily led by an 11% crash in March.

Markets witnessed a rebound in April, but the overall mood remains volatile amid soaring crude oil prices and inflationary concerns. In such a scenario, the broad outlook is likely to be cautious though and it will be wise to focus on the counters offering good value at current stock prices. A company’s price-to-earnings ratio (PE ratio) is a highly popular metric in this regard. It looks at a stock’s share price relative to the earnings of the underlying company. Investors tend to use a stock’s PE ratio to assess whether the stock is valued appropriately.

Normally, a high PE ratio could be a sign of future growth—or it could suggest that the stock is overvalued. The opposite could also be true though the key lies in defining the investing context judiciously as many a times, low PE ratios could offer long-term buying opportunities.

PE ratios of headline indices have turned lower in recent months owing to the mega correction witnessed in first quarter of the year. PE ratios of individual counters have also dipped. However, there is a case in point to eye counters that have seen a deterioration in PE ratios in tune with broad market declines though the overall financial performance of such counters is strong.

To find out such counters,