Industry Multiples India Report – 11th Edition Valuation

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Industry Multiples India Report – 11th Edition

We are pleased to launch the 11th edition of our quarterly report, Industry Multiples in India. This report provides an overview of trading multiples for various key industries in India as of June 30, 2020, using constituents* forming part of S&P BSE 500, S&P BSE LargeCap, S&P BSE MidCap and S&P BSE SmallCap indices.

Highlights

  • Global markets witnessed immense disruption during the last two weeks of March 2020. However, in Q2 2020, global equity markets showed an upward trend. The MSCI World Index rose nearly 19% in Q2 2020, the U.S. S&P 500 gained around 20% and the EURO STOXX 50 gained 16%. But the rebound in global financial markets seems to be in disconnect with the revised estimate of global GDP growth for CY 2020, which was negative 3% in April 2020 and negative 4.9% in June 2020.
  • Despite an overall surge in COVID-19 cases in India, the process of phased reopening, along with monetary stimuli from the government, resulted in mobility in some states which helped sustain investors’ confidence in the markets. With the reopening of business activities during Unlock 1.0, India witnessed an uptick of 19% in the Sensex and Nifty 50 indices.
  • Despite various detrimental factors impacting the economy, multiples across all sectors in India surged upwards during Q2. Sectors like application software, auto, metals and mining, pharmaceuticals and biotechnology, media and construction materials have seen a significant uptick since March 2020.
  • Overall multiples have increased primarily on account of positive market sentiment with the phased reopening of business activities in India. However, it is worth noting that as of June 30, 2020, the market and corresponding multiples were yet to experience the impact of FY 2021 Q1 revenue and earnings decline since March 2020 financials only had 10 days of lockdown reflected in the performance and the worst hit months, April and May were yet to be reported.

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 and in the S&P BSE LargeCap, S&P BSE MidCap and S&P BSE SmallCap Indices across 23 major industries for which such data is available. We hope you find this report helpful in getting an overview of the range of trading multiples for major industries in India. If you would like to receive further information or discuss any findings of this analysis, please contact us.

Disclaimer: Considering the high levels of volatility in the financial markets and increased uncertainty because of COVID-19, certain industries may experience temporary distortions in trading multiples. Readers need to use significant judgment when it comes to relying on and applying these multiples.

 

Sources
*Constituents with more than INR 5,000.0 million market capitalization as of June 30, 2020

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