Industry Multiples India Report – Tenth Edition Valuation

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Industry Multiples India Report – Tenth Edition

We are pleased to launch the tenth edition of Duff & Phelps’ Industry Multiples India Report. This report provides an overview and comparison of trading multiples for various key industries in India as of December 31, 2019 and March 31, 2020. We hope you find this comparison useful considering the extreme volatility observed in markets across the globe, including India, during the last few months.

Highlights

  • The COVID-19 pandemic has had an unprecedented impact on the global economy and the capital markets have inevitably gone into a tailspin. The International Monetary Fund (IMF) has revised its global GDP growth estimate for 2020 from positive 3.3% (on January 9, 2020) to negative 3.0% (on April 6, 2020).
  • The global panic has not spared India, and the Indian equity markets (S&P BSE 500) declined by roughly 38% from  the end of January to mid-March before gaining around 12% in the last seven days of March 2020 following the Finance Minister’s announcement of a fiscal package to help the economy tackle the COVID-19 slowdown.
  • Multiples for most companies plummeted during this period. Industries with significant declines in multiples include IT services and application software, construction and engineering, industrial machinery, real estate, auto parts and automobile manufacturers and banking and financials. Even sectors such as healthcare facilities and services and pharmaceuticals have been impacted with declining multiples.
  • Prior to the pandemic, global equity markets surged in Q4 2019 despite the low projected global GDP growth of 3% by the IMF in October 2019. This was driven by the expectations of a trade deal being signed between the U.S. and China, a third successive interest rate cut by the U.S. Federal Reserve, and a positive outcome for the UK elections including certainty surrounding Brexit. India witnessed a similar trend with the Sensex reaching its lifetime high during Q4 2019 on the back of corporate tax cuts, repo rate cut, foreign portfolio investors’ inflows and the privatization of public sector banks. 

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 you find this report helpful in understanding 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.

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