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Intrinsic Valuation of Nifty Energy Index Companies Using P/E Multiple Approach
Subject area: Management and Commerce · Area of research: Finance
DOI: https://doi.org/10.64388/IREV9I7-1713811
Abstract
This study evaluates the intrinsic valuation of companies listed under the Nifty Energy Index using a price?earnings (P/E) multiple?based relative valuation framework. The research examines 40 energy-sector companies across four sub-sectors?Renewables, Power Generation, Oil & Gas, and Utilities?to identify overvalued, undervalued, and fairly valued stocks. Secondary data were collected from NSE, BSE, company annual reports, and financial databases for the period FY 2021?22 to FY 2024?25, with market prices as of April 30, 2025. Intrinsic values were computed by applying sector-specific benchmark P/E multiples to trailing twelve-month earnings per share. The findings reveal significant valuation disparities within the index, with approximately 70 percent of companies trading above their intrinsic values, driven primarily by growth expectations, policy incentives, and ESG-related sentiment. Conversely, select PSU utilities and oil & gas companies exhibit undervaluation due to stable cash flows and dividend yields. The study provides practical insights for investors, portfolio managers, and policymakers by highlighting mispricing patterns and sector-specific valuation drivers in India?s energy transition.
Keywords
Intrinsic Valuation, P/E Multiples, Nifty Energy Index, Energy Sector, Relative Valuation
References
[1] Damodaran, A. (2012). Investment Valuation. Wiley.
[2] Koller, T., Goedhart, M., & Wessels, D. (2015). Valuation: Measuring and Managing the Value of Companies. Wiley.
[3] PwC India. (2023). Renewable Energy in India: Investment and Valuation Trends.
[4] Deloitte. (2022). Indian Utilities Sector: Trends and Valuations.
[5] International Energy Agency. (2023). India Energy Outlook.
[6] Banerjee, R., & Roy, S. (2018). P/E multiples in emerging-market energy indices.
[7] Jindal, M., & Kumar, A. (2021). Crude price volatility and valuation of oil & gas firms.
[8] National Stock Exchange of India. (2025). Historical market data.
[9] Bombay Stock Exchange. (2025). Equity market statistics.
How to cite this paper
@article{1713811,
author = {Sanapathi Naga Ramesh},
title = {Intrinsic Valuation of Nifty Energy Index Companies Using P/E Multiple Approach},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {9},
number = {7},
pages = {1950-1952},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1713811.pdf},
abstract = {This study evaluates the intrinsic valuation of companies listed under the Nifty Energy Index using a price?earnings (P/E) multiple?based relative valuation framework. The research examines 40 energy-sector companies across four sub-sectors?Renewables, Power Generation, Oil & Gas, and Utilities?to identify overvalued, undervalued, and fairly valued stocks. Secondary data were collected from NSE, BSE, company annual reports, and financial databases for the period FY 2021?22 to FY 2024?25, with market prices as of April 30, 2025. Intrinsic values were computed by applying sector-specific benchmark P/E multiples to trailing twelve-month earnings per share. The findings reveal significant valuation disparities within the index, with approximately 70 percent of companies trading above their intrinsic values, driven primarily by growth expectations, policy incentives, and ESG-related sentiment. Conversely, select PSU utilities and oil & gas companies exhibit undervaluation due to stable cash flows and dividend yields. The study provides practical insights for investors, portfolio managers, and policymakers by highlighting mispricing patterns and sector-specific valuation drivers in India?s energy transition.},
keywords = {Intrinsic Valuation, P/E Multiples, Nifty Energy Index, Energy Sector, Relative Valuation},
month = {January},
doi = {https://doi.org/10.64388/IREV9I7-1713811}
}