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Sensex EPS is 772

A year back, I wrote about the Sensational Sensex EPS Story:

So I read through some past projections of the Sensex EPS as of March 09.

  • Kotak Securities’ MD says 975-1000. (Feb 08)
  • Nilesh Shah, ICICI Prudential AMC says 1000. (Mar 08)
  • K.R. Choksey (or so it says) points to 1040. (Feb 08)
  • India Infoline Report: 1000 to 1050 (Feb 08)

Don’t diss these people, those were very different days. Now where are we today?

As of July 4, Sensex is at 13454, and P/E as given in the BSE web site is 16.61. This translates to an EPS of Rs. 810.

To get to Rs. 1,000 we need 25% growth over the next 9 months. Annualised, that is 33% growth! [Correction: The Sensex EPS is as of March 08, so we need only 25% growth. But I stand with the rest of the figures – maybe a 10 or 20 buck higher EPS on the sensex in 09. Thanks Ninad for the feedback.] With Inflation, interest rates, global slowdown, this is going to be really tough. If we get to 900 by March 09, that would be good – and 12 P/E there is about 10,800 on the Sensex.

This is just something to have in mind when people tell you that at 12,000 Sensex P/E is 12, and darn cheap and all that.

On Sep 10 2009, the Sensex quoted at 16,216 with a reported P/E of 21. The current Sensex EPS is 772.

From one year ago, we’ve dropped EPS about 5%, and the Sensex has gone up 20%.

A view is that we are recovering and the world is recovering, so we deserve a higher P/E. The next few quarters will reveal if that is true. But those 1000 EPS predictions for 2008 – they might have to wait till 2011, one thinks?