Overview
The Nifty Next 50 index, commonly known as the “benchmark for tomorrow’s leaders,” offers exposure to India’s mid-cap high-growth leaders. The index is trading at ₹64,315 as of April 25, 2025, with a 5-year CAGR of 22.8%—a testament to its potential.
But what gets investors excited today is its Price-to-Earnings (PE) ratio of 22.4. In this blog, we will break down why the PE ratio matters, how the Nifty Next 50 fares, and what it can do for your portfolio.
What is the Nifty Next 50 Index?
The Nifty Next 50 comprises 50 companies ranked between 51 to 100 by their market capitalization on the NSE. You can consider it as the “next in line” after the Nifty 50, giving you the opportunity to invest in potential companies like Adani Green, Varun Beverages, and LIC.
- Market Cap: ₹70.68 lakh crore (as of April 2025).
- Key Sectors: Financials (IRFC, PFC), Consumer Goods (Britannia, Godrej Consumer), and Energy (Adani Power, IOCL).
- Performance: In the last decade, it’s returned a 13.1% CAGR, beating most global mid-cap indices.
What is the PE Ratio
The PE ratio indicates how much money people pay for every rupee of earnings.
Formula: PE = Current Stock Price/Earnings Per Share (EPS).
Why It Matters: When a PE is high, a stock can be overvalued or investors expect it to rise significantly. For example, Adani Green has a PE of 106, reflecting its growth in the renewable space, while the PE of Bank of Baroda is relatively low, at 6.2.
Nifty Next 50’s Past PE Trends:
- 1-Year Range: 20.3 to 27.7
- 5-Year High: 97.1 (due to anomalous boosts in 2023–24).
- Current PE (22.4): Below its 3-year average of ~23.5, indicating fair valuation.
Current PE Ratio Analysis (April 2025)
- PE: 22.4 (-2.45% MoM).
- Price-to-Book (PB): 4.12.
- Dividend Yield: 1.38%.
Comparative Analysis:
- Nifty 50 PE: ~24.1 (as of April 2025).
- Sensex PE: ~23.8.
The Nifty Next 50 trades at a discount to the large-cap indexes and is therefore extremely attractive for value hunters. Consumer Durables (PE 75+ on Godrej Consumer) and Renewables (PE 99+ on Adani Green) obviously are pushing up the average.
Investment Implications
Opportunities:
- Bank of Baroda (PE 6.2) and Canara Bank (PE 5.3) present undervalued investment opportunities because of their safe value.
- The consumer market expansion interest’s investors in Varun Beverages (PE 68) as well as Avenue Supermart’s (PE 104.7).
Risks:
- The earnings stability of Divi’s Lab (PE 77.2) makes its stock susceptible to price declines in the market.
- High interest rates threaten infrastructure as well as other leveraged sectors in the economy.
Historical Trends and Predictions
🔴 COVID-19 anomaly spike (2022-23)
🟢 Current prediction range (2025-26)
Companies in Nifty Next 50
Value Picks: Undervalued Stocks (PE < 20)
Combining low valuations with strong fundamentals
| Company | Price (₹) | PE | Mkt Cap | Div Yield | ROCE |
|---|---|---|---|---|---|
| Power Finance Corp | 415.05 | 6.14 | 1,36,923 Cr | 3.31% | 9.85% |
| Bank of Baroda | 246.79 | 6.24 | 1,27,578 Cr | 3.08% | 6.33% |
| BPCL | 295.70 | 9.16 | 1,28,311 Cr | 7.10% | 32.09% |
| LIC | 791.20 | 11.63 | 5,00,342 Cr | 1.26% | 72.95% |
| Vedanta | 413.30 | 13.61 | 1,61,636 Cr | 10.53% | 20.91% |
Core Picks: Balanced Growth Stocks (PE 20–50)
Steady performers with sustainable valuations
| Company | Price (₹) | PE | Mkt Cap | Div Yield | ROCE |
|---|---|---|---|---|---|
| LTIMindtree | 4,498.30 | 29.00 | 1,33,363 Cr | 1.44% | 27.63% |
| Ambuja Cements | 548.70 | 31.98 | 1,35,223 Cr | 0.36% | 12.84% |
| HAL | 4,196.40 | 32.47 | 2,80,720 Cr | 0.83% | 38.88% |
| DLF | 653.55 | 43.10 | 1,61,762 Cr | 0.77% | 5.74% |
| Macrotech Dev | 1,305.10 | 47.09 | 1,30,184 Cr | 0.17% | 15.62% |
| Company | Price (₹) | PE | Mkt Cap | Div Yield | ROCE |
|---|---|---|---|---|---|
| DMart | 4,375.20 | 104.73 | 2,84,832 Cr | 0.00% | 19.41% |
| Adani Green | 912.55 | 99.34 | 1,44,603 Cr | 0.00% | 9.65% |
| Divi's Labs | 6,012.50 | 77.22 | 1,59,612 Cr | 0.50% | 16.48% |
| Pidilite | 3,011.20 | 76.47 | 1,53,229 Cr | 0.53% | 29.74% |
| Godrej Consumer | 1,266.50 | 75.19 | 1,29,666 Cr | 1.18% | 19.02% |
Conclusion
To sum it up:
The Nifty Next 50 PE of 21.9 at present, is also a buy call for mid to long term investors. With a basket of growth-oriented companies, this index has the stuff from which the contemporary Nifty 50 could be minted.
As an investor go beyond just index price and monitor how that price (investment) supports /hinders quality of Earning in for the investment in question. PE ratio is the tool of choice of mine to do so.