Analysis of Practice Multiples - Empirical Evidence from the Indian Stock Market

Authors

  • Shveta Singh
  • P. K. Jain
  • Surendra S. Yadav

DOI:

https://doi.org/10.33516/rb.v44i1.1-16p

Keywords:

Price/Earnings (P/E) Ratio, Price/Book (P/B) Ratio, Earnings per Share (EPS), Indian Equity Market, Over-Valuation, Under-Valuation.

Abstract

This paper computes and analyses price multiples (price/earnings (P/E) ratio, price/book (P/B) ratio and earnings per share (EPS) for the Indian stock market. The sample for the study comprises of the NSE 500 companies which represented 96.76 per cent of the free-float market capitalization and 97.01 per cent of the traded value of the stocks listed on the NSE as on December 31, 2013, and the period under study, is spread over the past more 15 years (2001-2014). Hence, virtually, the chosen sample presents a census on equity market price multiples in India.

The Indian economy appears to be led by more than six-tenths of the sample companies, in terms of aggressive (high) P/E ratios. Further, the market response to EPS growth is evident. This can be regarded as a testimony of fundamentals applying in the Indian economy. The aspect that the sample companies also represent value stocks is brought forth by the P/B ratios. In sum, it appears that the Indian stock market provides returns to both fundamental (long-term) and technical (short-term) investors. This is perhaps why the Indian stock market continues to attract domestic as well as foreign capital market investments.

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Published

2018-04-01

How to Cite

Singh, S., Jain, P. K., & Yadav, S. S. (2018). Analysis of Practice Multiples - Empirical Evidence from the Indian Stock Market. Research Bulletin, 44(1), 1–16. https://doi.org/10.33516/rb.v44i1.1-16p

Issue

Volume 44, Issue 1, April 2018

Section

Articles
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