The price to earnings multiple (P/E) of Indian stock markets stood at 14.64 times as the 30-scrips BSE Sensex hit an all-time high level of 8000 on Thursday.
At the Sensex level of 7000 (June 21, 2005) the P/E hovered at 12.54 and at 6000 Sensex level (November 17, 2004) the markets P/E stood at 12.16.
The P/E as on September 8 and June 21 this year is based on net profit of the trailing 12 months ended June 2005. The P/E for November 17, 2004 is based on the net profit for the trailing 12 months ended September 2004.
The stock prices becoming dearer as the markets hits new highs every day, the number of scrips trading at the P/E of over 10 times increased from 568 when the Sensex was at 6000, to 724 when Sensex climbed to 7000. With the Sensex crossing hits above 8000 marks, 948 companies trade at the P/E of over 10 times.
The rising markets have also made a number industrial sectors dearer. At the Sensex level of 7000 as many as 30 sectors tracked by the Business Standard Research Bureau were traded at P/E below 10 times.
On Thursday, only 16 sectors are trading at P/E below 10 times. Similarly, 51 sectors were trading at an average P/E of 12.35 at Sensex level of 7000. On Thursday, 40 sectors trade at P/E of below 14.34 times.
Among various industrial sectors, shares of shipping, white goods, steel, chemicals and aluminium companies are trading at the P/E of below 10 times. Shipping companies which have aggregate net profit of Rs 3,228 crore for trailing 12 months (TTM) ended June 2005, trades at a P/E of 3.84 times.
Integrated steel companies trades at P/E of 4.64 times despite TTM net profits of Rs 11,509 crore. Steel Authority of India is available at the P/E of 3.66 times while Tata Steel trades at P/E of 6.29 times.
The consolidation in liquor manufacturing companies saw P/E for breweries and distillaries sector soaring to a new high of 95 times on Thursday.
The liquor companies were trading at P/E of 13.85 times on June 21, 2005. The other sectors which are trading at abnormal P/Es are industrial explosives.
