The Nifty Earnings Per Share (EPS) Growth – as revealed by the National Stock Exchange – is slowing.
We are again diverging from the P/E which has now crossed 19.
If you think that looking at one year is bad, then let’s see longer terms. EPS Growth of the Nifty, annualized for:
1 year: 7.37%
2 years: 9.5%
3 years: 10.0%
4 years: 4.6%
5 years: 6.2%
7 years: 10.0%
These are not figures that warrant a 19 P/E, to be honest. Don’t get me wrong, 10% or 8% are good growth rates. But when you pay a P/E of 15-21, you would expect more, one thinks.
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So did that mean Nifty is overvalued ;)
02.07.12 at 8:36 PM
After the run up in the markets, it is better to stay cautious and stick to stable and safe stocks.
02.07.12 at 11:19 PM
What about valuation based on other parameters
=> return on equity
=> return on incremental capital
if Sales growth > EPS growth, these parameters are going to go bad.
02.08.12 at 10:36 PM