Screaming buys: Large-cap companies trading closer to their 52-week lows

At a time when global funds are paying massive premiums to AI and related technology companies - often at 50x PE multiples - India is offering many comparable firms lower single-digit PE multiples

India’s largest companies have become some of the cheapest firms over the last three years where price-to-earnings (PE) multiples have crashed and investors have given up on growth.

 

The Nifty 100 trades at 19x earnings against a three-year average of 22x. Of the 100 companies that Business Standard screened in terms of market capitalisation (mcap), there are 29 stocks that are within 10 per cent of their 52 week lows.

 

Ten stocks that are 2 per cent away from their 52 week lows included Reliance, Hindustan Lever, Britannia, Maruti, Trent, and Power Finance Corporation (PFC).

 

At a time when global funds are paying massive premiums to artificial intelligence (AI) and related technology companies — often at 50x PE multiples — India is offering many comparable firms lower single-digit PE multiples.

 

Take the matrix of PFC. It has an return on equity (RoE) of 26.8 per cent and it trades at a price-to-book value of 0.86 per cent. The cash on the balance sheet is ₹4,672 crore. Profits are up 12 per cent in financial year 2025-26 (FY26). In June 2026, there was an announcement of a proposed merger between REC and PFC. Both are power finance companies. They borrow money from the market and lend it to power-generation companies and renewable energy (RE) projects. The merger should ideally create a government-backed financial institution with a loan book exceeding ₹11 trillion. Foreign institutional investors (FIIs) already hold 19 per cent of PFC. Similar is the case with ONGC. The company has hard assets and is trading very close to its 52-sweek low. 

 

These are dream stocks of a value fund manager. They look at single-digit PE multiples, high growth in profits, and ideally high networth or huge cash on the balance sheets. These are companies that are available in the midcap and smallcap space. So, that makes them risky both in terms of promoter profile as well as liquidity. Rarely are these opportunities seen in the largecap space.

 

A famous fund manager picked up Lakshmi Machine Works in late 1980s when he saw that the cash on the balance sheet of the company was higher than its mcap. The PE multiple was 2x and its price-to-cash earnings was closer to 1x. The fund manager purchased the stock in 1989, and by 1994, the stock was up 30x. This was clearly an opportunity in the midcap space at that time.

 

In general, this kind of value-buy opportunities don’t happen in the largecap space. So, when we look at stocks trading at single-digit PE multiples in the largecap space, there is a lot of scepticism. This scepticism comes more out of the fact that many of these largecap companies are operating from a higher base and they may not be able to grow from here onwards, so their present multiples are justified. Analysts feel that these companies can grow at 12-18 per cent annually, and this is getting captured in the price.

 

“We believe the more compelling opportunity in India remains outside the largecap universe. Largecaps may look relatively inexpensive, but valuation without superior earnings growth can remain a value trap. The real opportunity lies in identifying midcap and smallcap businesses capable of compounding earnings materially faster than the market,” said Manish Bhandari, chief executive officer (CEO) and portfolio manager, Vallum Capital.

 

He feels that earnings growth outside the Nifty 50 has been significantly stronger, while midcaps have been among the strongest contributors to incremental corporate profits.

 

More importantly, many beneficiaries of India’s manufacturing, capital expenditure, power, electronics, defence, and financialisation themes reside in the broader market. As these businesses scale, operating leverage can translate revenue growth into disproportionately higher profit growth.

 

“Ultimately, markets reward earnings compounding. We would rather pay a reasonable premium for 18-25 per cent sustainable earnings growth than buy apparent value growing at 8-10 per cent,” he said.

 

On the other hand, some mutual funds are becoming big bulls on the largecaps. They feel that firms like HDFC Bank and some non-banking financial companies (NBFCs) are available at lower valuations, and even if these valuations fall, they are great buys. HDFC Bank is available at a price-to-book value of 1.85x and is trading very close to its 52-week low. These are the companies that will eventually get back on the growth path. Even if they don’t grow at a faster rate, the valuations are apt and most value fund managers are ready to wait. Afterall, they have been there and done that.