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Charts & Analysis

Nifty Stocks: EPS not quite growing?

Going through the Nifty stocks as results poured in, and some startling facts:

Nifty Stocks: EPS not quite growing?

  • Of the 50, 24 have contracted EPS. Meaning earning per share is less than the year earlier.
  • Current Nifty P/E is 20. Of the 50 stocks, a total of 39 stocks have grown EPS < 20% y-o-y.
  • With the new calculations of Nifty weights (based on free float) the EPS drops nearly Rs. 4 for Nifty as a whole. So Nifty EPS today is 215 versus around 220 as calculated before the nifty weight.
  • Last year at this time the Nifty EPS was 234. So as an index the Nifty has dropped 8% on EPS in a year.
  • There are some more stock issuances, QIPs, dilution like CCPS in Tata Steel, and so on. This is going to hurt EPS even more.
  • Bank EPS still seems to be strong in terms of growth.

Bank EPS will only move down if banks will recognise losses as they happen – some of the default story is yet to come.

I’ve used consolidated EPS where I could get info, and standalone where I couldn’t. In that, this calcuation differs from NSE (which takes only standalone into consideration for Nifty P/E and EPS calculations)

Will be an interesting budget tomorrow. Let’s see how that goes.

  • Anonymous says:

    >GAIL had a bonus of 1:2 last year.

  • Anonymous says:

    >Deepak I would like to add this quote from Rakesh Jhunjunwalla

    "Never forget in all this momentum that in 1992 the price of Hindustan Lever was Rs 18.20 whereas the index was 4,300, but in 2003 when the index was 2,900 then HLL was Rs 328. As an investor I found that it is not how high my scrip goes, it is at what level it settles after it goes high."

    And do recall all the software riches were made when the indian market was in bear phase.

    And in 2001-2003 PSU stock stood out.

    so in a sense why should anyone worry where the index is.

  • Deepak Shenoy says:

    >Anon: Thanks, will correct today. Any other splits/bonuses I might have missed?

    Anon2: There was no Nifty in 1992. The sensex (which was at 4300 in 92) never reached the 4K levels in the 2000s – was around 8K IIRC.

    Also Arvind Mills was Rs. 400 in 1992 and is Rs. 20 or so today. Still, HUL, Hero Honda, Reliance – all of them have gone up tremendously. At the same time a number of stocks have dropped out of the index, some unceremoniously, and we can't ignore those either – the likes of Satyam, Digital Equipment etc. And those that went down, the likes of Arvind to Bombay Burmah etc.

    We're overvalued as an index, there's not much doubt about it. But individual stocks may do well, of course.

  • Anonymous says:

    >Hi deepak

    No… the height of 2000 sensex was at around 6500.And RJ was talking about sensex at 2003 bottom level.

    The crux of the quote was that if the stock an investor picked is good,then he will get the returns. regardless what the index is doing.

    Does it matter which index we are talking about.

    Isn't it a job of investor to look individual stock. Not what the index PE or EPS is. And if somebody really wants to make money then he should pick stock outside of index in midcap and smallcap

    Some body always wins and somebody always loses, in the stock market game. That has always been and will always be the rule of the game.

  • Anonymous says:


    – For Reliance Industries above site says EPS for 2008/2009 are 133 and 97 respectively (different from yours)

    – Any idea why or is the above site data more correct? . (I am trying to see if data published in above site is accurate, for my future reference)

  • Deepak Shenoy says:

    >Anon: Reliance had an earning of 133 in 2008 but there was this one time earning from the RPL stake sale. I should have used that – but I used the "before extraordinary items" figure – to see if the data would be better. Didn't help!

  • sumi says:

    >Your blog has some really good analysis.