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Charts & Analysis

Chart: Nifty Stocks and Their Earnings Growth and P/E Ratios


As all the Nifty results have trickled in, we have a P/E ratio for the Nifty on a consolidated basis (NSE only gives us standalone). The P/E ratio is now 21.45 at the Nifty level of 10656.
Earnings growth on a consolidated basis is about 11%. This is fairly decent.
Now lets look at the stocks of the Nifty, their P/E and trailing 12 month CONSOLIDATED Earnings Growth:
Chart: Nifty Stocks and Their Earnings Growth and P/E Ratios
What is not here is :

  • JSW Steel and Tata Steel (profits went up big time due to a base effect)
  • Tata Motors (sees a major decline in earnings and would have screwed up the chart)
  • Axis Bank which has really lousy results last year:

The line on the pic is the 1:1 line for earnings growth = P/E. So anything below or to the right of the line is growing faster in earnings than the P/E number.
Stocks like Bajaj Finance have P/E of 40+, but to be honest, it’s also delivered growth of 40%.
A P/E of 21 isn’t too high, but isn’t low either. But a return to double digit growth is a good sign, and lets hope it sticks!


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