Cheap, or dying?

Summary: A low P/E can mark a genuine bargain or a business quietly dying, and the two look identical on a screener. This column contrasts PC Jewellers' collapse with Infosys's 2017 rebound to show why the reason a stock is cheap matters more than the price itself, plus a checklist for telling the two apart.

Summary: A low P/E can mark a genuine bargain or a business quietly dying, and the two look identical on a screener. This column contrasts PC Jewellers' collapse with Infosys's 2017 rebound to show why the reason a stock is cheap matters more than the price itself, plus a checklist for telling the two apart. Open any stock screener, sort by the lowest price-to-earnings ratio and you get a tidy list of ‘cheap’ stocks. Somewhere on it sits a genuine bargain. Right next to it sits a business quietly dying. On the screen, the two look identical. That is the problem with cheap. It feels like a reason to buy. It is really only a reason to ask a question. A low price is like a marked-down shirt Think of a low P/E like a shirt on sale. Sometimes the price is cut because the season is ending and the shirt is fine. Sometimes it is cut because there is a tear near the seam you have not spotted. The only way to know is to check the seams. When you see a low price, one question does most of the work: Cheap compared to what, and why? Two companies, same signal, opposite endings Two real cases. Both looked cheap. One rewarded the buyer, one destroyed him. The trap (PC Jewellers): In January 2018, PC Jewellers touched an all-time high of about Rs 587 a share, worth near Rs 23,000 crore. It then slid. Here is the cruel part: the stock looked cheaper at every step down. Rs 400 looked like a

This article was originally published on October 01, 2026.