Synopsis: Article goes around small‑cap stocks that have achieved a 3‑year Profit CAGR of over 30% and have a PEG ratio below 1, including Shakti Pumps, HBL Engineering, Cemindia Projects, and more.
A company with a 3-year profit growth greater than 30% indicates strong financial performance and improving profitability. It suggests the company is efficiently managing its operations, generating increasing earnings over time. This reflects a solid business model and potential competitive advantages in its sector.
A PEG ratio of 1 is generally considered to indicate that a stock is fairly valued, as the price aligns with the company’s growth rate. A ratio below 1 suggests that the stock may be undervalued relative to its growth potential, while a ratio above 1 could indicate overvaluation.
Investing in companies with strong profit growth and a PEG ratio below 1 offers potential for wealth creation. These stocks reflect improving profitability, efficient operations, and fair valuation, making them valuable opportunities for investors seeking high-growth, dynamic market players.
Here is the list of stocks to look out for:
Shakti Pumps (India) Ltd, founded in 1982, is a leading Indian manufacturer of energy-efficient pumps and motors, specializing in stainless steel pumps and solar water pumps, serving agriculture, industry, and residential sectors globally with a focus on innovation and sustainability.
Over the last three years, the company has delivered impressive growth with an 85% Profit CAGR. It has a Return on Capital Employed (ROCE) of 55.3%, Return on Equity (ROE) of 42.6%, and a PEG ratio of 0.26, reflecting strong earnings growth potential at a relatively attractive valuation.
HBL Engineering Ltd
HBL Engineering Ltd. (formerly HBL Power Systems) is a leading Indian research-based engineering company, established in 1977, specializing in developing and manufacturing niche, technology-intensive products like industrial & specialized batteries (Lead Acid, NiCad, Lithium-ion), railway electronics, defense electronics, and electric mobility solutions, serving critical sectors like Aviation, Defense, Railways, Oil & Gas, and Telecom.
Over the last three years, the company has delivered impressive growth with a 48% Profit CAGR. It has a Return on Capital Employed (ROCE) of 27.3%, Return on Equity (ROE) of 20.6%, and a PEG ratio of 0.80, reflecting strong earnings growth potential at a relatively attractive valuation.
Cemindia Projects Ltd
Cemindia Projects Ltd (formerly ITD Cementation India Ltd) is a major Indian engineering and construction firm, known for complex heavy civil works like maritime structures, metro systems (MRTS), tunnels, dams, bridges, airports, and industrial infrastructure, leveraging deep expertise in specialist foundation work and EPC contracts, aiming for quality delivery and market leadership.
Over the last three years, the company has delivered impressive growth with a 76% Profit CAGR. It has a Return on Capital Employed (ROCE) of 27.6%, Return on Equity (ROE) of 21.8%, and a PEG ratio of 0.37, reflecting strong earnings growth potential at a relatively attractive valuation.
Oriana Power Ltd
Oriana Power Ltd is an Indian renewable energy company providing solar solutions for industrial and commercial clients, operating via Capital Expenditure (CAPEX) and Renewable Energy Service Company (RESCO) models, focusing on rooftop, ground-mounted, and open-access solar projects, and expanding into Green Hydrogen and Battery Storage, aiming to promote low-carbon energy and sustainability.
Over the last three years, the company has delivered impressive growth with a 183% Profit CAGR. It has a Return on Capital Employed (ROCE) of 42.3%, Return on Equity (ROE) of 48.4%, and a PEG ratio of 0.10, reflecting strong earnings growth potential at a relatively attractive valuation.
Kirloskar Brothers Ltd
Kirloskar Brothers Limited (KBL) is a leading Indian multinational engineering company, established in 1888, specializing in fluid management systems, manufacturing pumps, valves, and hydro turbines for diverse sectors like water, power, irrigation, oil & gas, and building & construction, known for its innovation, global reach, and large-scale fluid solutions, making it a flagship company of the Kirloskar Group.
Over the last three years, the company has delivered impressive growth with a 65% Profit CAGR. It has a Return on Capital Employed (ROCE) of 27.6%, Return on Equity (ROE) of 21.6%, and a PEG ratio of 0.51, reflecting strong earnings growth potential at a relatively attractive valuation.
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