7/25/2019 6200 -Then and Now

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Nov 2013 | Equity Update

Anand Rath i PWM Resear ch

Nifty at 6200

Then & Now | A Perspective

To reach the all time high Nifty level of 6300 in true sense, Nifty would have to go up by 75% from

the current level of 6300 from a valuation perspective.

Below analysis of each of the valuation parameters indicate the discount at which the current Nifty

is from its all time high.

Ratio 4thJan,

2008

31st Oct,

2013

Remarks

Nifty Value 6274.3 6299.15

Price/Earnings 28.23 18.18

An analysis of the Price to Earnings ratio suggest Nifty is at

a 35% discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is at 4040 at current trailing PE Valuations.

This is basically because the denominator E (earnings) has

appreciated by around 55% since 2008.

Price/Book Value 6.53 2.99

In terms of Price to Book Value, Nifty is at a 54% discount

to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is available at around 2870.

Dividend Yield 0.82 1.46

The current Dividend Yield indicates that the Nifty is at a43% discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is at around 3520.

Mkt Cap/GDP 146.9 68.6

The Market Cap to GDP indicates that the Nifty is at a 53%

discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is available at around 2930.

Price/Sales 3.58 1.9

The Price to Sales indicates that the Nifty is at a 47%

discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is available at around 3330.

Price/EBIDTA 14.74 8.99

The Price to EBIDTA indicates that the Nifty is at a 39%

discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is available at around 3830.

7/25/2019 6200 -Then and Now

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Nov 2013 | Equity Update

Anand Rath i PWM Resear ch

EV/ Sales 3.76 2.39

Enterprise value (EV) is the sum of the market cap of the

companies plus the debt of these companies. This is

considered to be a very efficient measure because it also

takes into consideration the outstanding debt of companies

which also needs to be paid back at some point of time.

The EV to Sales indicates that the Nifty is at a 36% discount

to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount is available around 3990.

EV / EBIDTA 15.48 11.29

The EV to EBIDTA indicates that the Nifty is at a 27%

discount to the all time high levels achieved in 2008.

To put it in absolute terms, Nifty value according to this

discount should be around 4580.

Conclusion

While the Nifty in absolute terms is close to its all time high of ~ 6300 first achieved in2008, an analysis assuming an equal weighting to each of these 9 valuation ratios reveals

that real value of Nifty is at 3633.

Given that valuations are below the average and are polarized, there is immense

opportunity to invest and grow in the coming few years.

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