Stocks Trading At Highest Premium To Long-Term Valuations
A bronze bull statue stands at the entrance to the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Stocks Trading At Highest Premium To Long-Term Valuations

An unprecedented rebound from the low of March last year and a steady rise in 2021 has made Indian equities even costlier.

The benchmark Nifty 50 has risen more than 12% so far this year compared with a 5% rise in the MSCI Emerging Market Index. That’s after a 15% jump in 2020, prompting even the central bank to flag a “bubble” risk.

The Nifty 50 index is trading at 30.6 times its 12-month trailing earnings—a 25% premium to its five-year average. By comparison, the MSCI Emerging Index is trading at 16.8 times.

Of the 603 companies with market value greater than Rs 500 crore, excluding banking and financial company stocks, 453 are trading above the five-year average of their trailing twelve-month PE multiple.

BloombergQuint compiled a list of small-, mid- and large-cap companies trading at a premium to their historical valuations.

Selection criteria:

  • FY22E forward PE is at a premium of at least 25% to five-year average.

  • Stock is covered by at least five analysts.

  • Financial sector firms excluded.

NSE Midcap 100 Index:

As many as 70 companies have both forward PE and five-year average PE available. Out of these, 32 companies have FY22E PE greater than five-year average.

NSE Small Cap 100 Index:

Nearly 53 companies have both forward PE and five-year average PE available. Out of these, 23 companies have forward PE higher than five-year average.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.