A recent survey of professional equity analysts found that “market multiples” were by far the most popular approach to valuation” among nearly 2,000 respondents (Source: Morgan Stanley). Assessing valuation multiples is generally observing based - how the markets valued the stock (or similar stocks) in past periods, given size, growth and margins at the then prevailing time.
We have tabulated useful quarterly valuation multiples for 2000 Indian companies for easy use by investors and analysts. From company consolidated and standalone reports, we have created a uniform financial data sets for each company. Basis this, valuation multiples have been computed for last 10 years. This enables us to see valuation multiples alongside growth and margin data for each company - on each Quarterly and TTM result dates.
A quick pictorial overview is presented below: Data for Asian Paints
Growth and Valuation Matrix - Please note PE, PB, EV/EBITDA alongside growth, margin and ROE data. Quarterly and TTM trend available on each result date.
Impact of PE increase or decrease on Share price: We use this matrix to assess the price contribution of EPS growth and PE growth. The following chart shows that EPS growth has contributed meaningfully to share price increase across the 3 periods. Over 1 year duration, Asian Paints’ share price has increased by Rs 874. EPS increase contributed Rs 1118 while PE ratio fell taking away Rs 244 from the Price. Clearly, although Asian Paints has a very high PE of 80 times, its share price has increased due to strong increase in its EPS. How we compute this - The formulae applied for computing EPS contribution to price is Old PE * (New TTM EPS - Old TTM EPS). PE contribution is the balancing figure.
Balance sheet snapshot: Comparing market capitalization with Networth, net block and CFO is quite helpful to review balance sheet strength
P&L Account is a lot more useful once we have market price and market cap shown alongside Sales, PAT and EPS data.
Balance sheet ratios with Working Capital Days, Asset Turnover and D/E across periods along with market Capitalization
Industry Aggregates are very useful to understand how industry has changed over time and how market has valued these industries. This data is for the Paint Industry.
“Industry granular” will help zone in top performing industries and avoid struggling sectors. This data shows PAT Margin for the Paint Industry companies.
Read our next blog on our unique valuation filters.