Price earning ratios of industrial houses dip

Written by Pradip Kumar Dey | Mumbai | Updated: Mar 14 2009, 04:17am hrs
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The pall of gloom over the market has led to a significant dip in the price earning (P/E) ratio of the countrys top 25 industrial houses, a study by FE has revealed.

The P/E ratio of top 25 industrial houses decreased to 10.61 times on March 9, 2009, from 23.20 on March 10, 2008.

The study period also saw a significant decline in Sensex stocks. P/E ratio of Sensex companies decreased by 8.54 points to 11.62. This compares with 20.16, recorded during the previous year. The market cap of the Sensex companies during the study period dipped 45.2% to Rs 12.84 lakh crore, as on March 9, 2009.

Among the 25 industrial houses that constituted the study, the top five houses according to P/E ratios, as on March 9, 2009, were Wadia, Godrej, Oberoi, UB and ADAG.

The average P/E ratio of the Wadia group (4 units) increased from 31.92 on March 10, 2008 to 645.35 on March 9, 2009. The trailing four quarters net profit of the group decreased from Rs 199.28 crore to Rs 5.56 crore during the study period. The market capitalisation of the group also dipped 43.6% to Rs 3588.15 crore, as on March 9, 2009.

The average P/E ratio of the Godrej group (4 units), on the other hand, decreased from 45.62 on March 10, 2008 to 24.69 on March 9, 2009. The trailing four quarters net profit of the group decreased from Rs 270.3 crore to Rs 198.02 crore. The market capital of the group dipped 60.3% to Rs 4888.45 crore on March 9, 2009.

In case of the Oberoi group (2 units), the average P/E ratio decreased from 27.95 on March 10, 2008 to 21.17 on March 9, 2009. The trailing four quarters net profit of the group decreased from Rs 227.18 crore to Rs 179.05 crore. The market capitalisation of the group dipped 40.3% to Rs 3,790.54 crore on March 9, 2009, from Rs 6,349.32 crore on March 10, 2008.

Among the top five houses according to P/E ratio, the highest decline in the ratio was seen in the case of UB group. The average P/E ratio of the group decreased from 54.56 on March 10, 2008 to 18.28 on March 9, 2009. The trailing four quarters net profit of the group increased from Rs 501.43 crore to Rs 504.75 crore. The market capital of the group dipped 66.2% to Rs 9224.75 on March 9, 2009.

Among the industrial houses that were part of the study, lower P/E ratios were seen in the case of MM Murugappan, Shiv Nadar, Aditya Birla Mgmt Corpn, Sterlite and Hinduja. The P/E ratio of MM Murugappan decreased from 19.36 to 2.82 on March 9, 2009.