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Charts & Analysis

Chart Of The Day: Nifty P/E Versus EPS Growth

As Q2 results come in, the Nifty EPS is adjusted upwards, and we can see how the EPS has been growing since last year. Compare that to the P/E ratio of the index, and we have a chart:

Nifty P/E and EPS growth

EPS Growth is currently 15.7%, having recently peaked at 17.7%. The current P/E is 19.03.

They say the P/E reflects one year forward growth – so let’s check what the P/E said one year back (Normalized) and today’s EPS growth:

Nifty Normalized P/E and EPS growth

We haven’t met expectations since, wait, 2007. Sure, this is not consolidated EPS, which is a little higher (and unknown at this point since most companies don’t reveal consolidated results until the end of the year). The results of all Nifty companies aren’t in yet, and I’ll post a new chart once they’re all in.