Industry Multiples India Report – Ninth Edition

We are pleased to launch the ninth edition of our Industry Multiples India Report for the quarter ended September 30, 2019. The report provides trading multiples for the quarter as well as a comparison with the average of the trading multiples for the previous two years. We hope this additional information increases the usefulness of the report.

Highlights

  • Global equity markets witnessed volatility during the quarter with factors like strong results, interest rate cuts by the Federal Reserve (Fed), escalation in the U.S.-China trade war situation, Brexit uncertainty and recent geopolitical unrest resulting in a modest decline of about 0.8%.
  • Domestic equity markets declined consecutively in July and August due to lukewarm corporate earnings in the quarter ended June 30, 2019 and sluggish industrial activity. This led to the International Monetary Fund lowering India’s growth outlook from 7% to 6.1% and the Reserve Bank of India reducing the repo rate by 35 basis points in August. 
  • On September 20, 2019, the Finance Minister announced a reduction in the effective corporate tax rate, lowering it from 35% to 25%. As a result, market capitalization for a majority of the sectors increased on average by 6.2% in the week following the announcement, leading to improved trading multiples.
  • Overall, the trading multiples for a majority of the sectors declined during this quarter with the largest decline observed in the household and personal goods, IT and banking sectors. The auto sector continued to remain under pressure albeit with slight improvement in sales.
  • On the other hand, sectors like apparel and electric and gas utilities recorded the highest expansion in multiples during this quarter on the back of strong expected sales growth in apparel during the holiday season and an uptick in power demand in India by 6.7% during this quarter.

Our report provides a detailed overview of the P/B, P/E, EV/EBITDA and EV/Sales multiples of companies in the S&P BSE 500 Index across 23 major industries for which such data is available. We hope that you find this report helpful in understanding the range of trading multiples for major industries in India.

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