PE of half the Sensex shares drops to 10 or less

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SMS BOS < SPACE > MF, MUTUAL FUND QUERY AT 56388
COS GETTING FRESH FDI IN SECTORS WHERE FDI CAPS HAVE GONE UP: SOURCES
NEW NORMS TO CONSIDER TOTAL FOREIGN INVESTMENT NOT TOTAL INVESTMENT: SRCS
CCEA NOD NEEDED ONLY FOR INVESTMENTS OF RS.1200 CR AND ABOVE: SOURCES
GOVT TO EASE NORMS FOR FDI REQUIRING CABINET APPROVAL: SOURCES
NO PLANS TO OFFER HOME LOANS AT 8%: NW
OCTOBER UNEMPLOYMENT RATE RISES TO 10.2% VS 9.8% (MOM)
EMPLOYERS CUT PAYROLLS BY 190,000 IN OCTOBER VS ESTIMATE OF 175,000
FOREIGN FUNDS NET BUY RS.587.02 CR IN EQUITIES ON NOVEMBER 6 (PROVISIONAL)
DOMESTIC FUNDS NET BUY RS.236.62 CR IN EQUITIES ON NOVEMBER 6 (PROVISIONAL)
KINGFISHER RAISES FUEL SURCHARGE BY RS.200 ON SECTORS MORE THAN 1000 KM
KINGFISHER RAISES FUEL SURCHARGE BY RS.100 ON SECTORS UPTO 1000 KM
JET AIRWAYS RAISES FUEL SURCHARGE BY RS.100-150 ON SECTORS UPTO 1000 KM
NET PROFIT AT $455 MN VS LOSS OF $24.6 BN (YOY)
TOTAL REVENUES AT $26.05 BN VS $898 MN (YOY)
MUTUAL FUNDS NET BUY RS.34.3 CR IN EQUITIES ON NOVEMBER 5
FOREIGN FUNDS NET BUY RS.267.6 CR ($56.8 MN) IN EQUITIES ON NOVEMBER 5
OVER 7% GROWTH ACHIEVABLE IN FY'11
TO EXPLORE STIMULUS EXIT MODE NOW; WINDING DOWN STIMULUS TO CUT DEFICIT
SENSEX UP 1.65%, NIFTY UP 1.8% FOR THE WEEK
CNX MIDCAP INDEX UP 3.9%, BSE SMALLCAP INDEX UP 1.6%
BSE PSU INDEX UP 4.77%, REALTY UP 4.4%, METAL INDEX UP 4%
INDEX GAINERS: BHARTI UP 9.4%, JP ASSOCIATES UP 8.6%, IDFC UP 7%
GETS U.S. FDA NOD FOR GENERIC ACULAR
TO RAISE UPTO $300 MN VIA FCCBS
EXTENDING 8% HOME LOAN SCHEME TILL 31ST MARCH , 2010
INDIAN RAILWAYS SHOULD RATIONALISE PASSENGER FARES UPWARD
TO RAILWAYS: STOP CROSS SUBSIDISING FARES AND FREIGHTS
IMPOSES 20% SAFEGUARD DUTY ON IMPORT OF SODA ASH
ROAD DEFICIT REMAINS THE GREATEST PROBLEM IN INFRASTRUCTURE IN INDIA

Updated: 12/10/2008 | 03:37 PM IST

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Press Trust of India

Sunday, October 12, 2008 (Mumbai)

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With the stock market taking a severe beating, the PE or Price Earning ratio of 15 out of 30 Sensex shares has dropped to ten or less as of Friday – October 10, according to the data available.

The PE ratio for as many as 11 Sensex shares is in single digits, the data reveals. The PE ratio indicates to what extent market is willing to pay for the company's earnings. PE is typically higher when the market is booming and drops when the sentiment turns bearish. High performing companies generally tend to command higher PE ratios. PE ratio also depends upon liquidity available in the market.

Among the companies whose PE ratios are less than 10 are ICICI Bank (9.9), SBI (9.8), Reliance Comm (8.6), Satyam Computers (9.1), ACC (7.4), Tata Motors (6), DLF (5.9), Hindalco (4.8), Grasim (4.7), Sterlite (4.4). The lowest PE is that of Tata Steel at only (1.7) .

Shares with PE ratio of ten are Reliance Ind (10.9), ONGC (10.5), TCS (10), and Reliance Infra (10.9).

The PE for the Sensex overall was 13.44 as of October 10 largely due to comparatively higher valuations still commanded by shares like HDFC Bank (25.7), the highest among the 30 Sensex shares. Besides, Hindustan Unilever also has high PE of 24.8 and so also BHEL 22.3 and NTPC at 20.2.

The PE ratio is calculated by dividing the market price of a company's share by the earning per share (EPS). While the earning per share is calculated by dividing the net profit of the company by the number of its shares.