Indian equity markets remained volatile recently, tracking unfavourable global cues. The Russia-Ukraine war, sustained foreign capital outflows, rising commodity prices, surging crude oil prices, and increasing prospects of monetary tightening by central banks have soured investors’ sentiment across the globe.
Despite the gloom, some stocks have seen a sharp rally in prices, becoming more expensive than their peers.
Note: A stock is said to be cheap or expensive based on the value it offers to its investors and not the price at which it is available in the market. A high price could simply be because the issued capital has been divided into fewer shares.
We can value a company’s stock by comparing its prevalent market price to some key fundamental metric such as earnings, book value, sales etc. Comparing this value with its own historical average, peers or industry average gives us a sense of whether the stock is undervalued or overvalued.
One of the most commonly used valuation ratio is the price-to-earnings (P/E) ratio. P/E ratio compares a stock’s prevalent market price with its earnings per share. This indicates how much an investor has to pay for each rupee of earnings.
For example, a P/E ratio of 20 means investors have to pay Rs 20 for every Re 1 of earnings generated by the company.
A company with a high P/E ratio is considered expensive compared to a company with a low P/E ratio.
Here is a list of the top 10 companies with high P/E ratios:
|Adani Total Gas
At a P/E ratio of nearly 1,300, FSN E-Commerce or Nykaa is among the most expensive global Internet/consumer stocks. Nykaa is different than other internet stocks as the company has been successful in scaling up growth along with maintaining profitability. Its premium valuation is backed by strong growth estimates amid its leadership positioning in the online beauty space.
The e-commerce company reported a consolidated net profit of Rs 29.01 crore in the quarter ended December 2021 and a revenue of Rs 1,098.36 crore.
Adani Green Energy is a renewable energy company that operates Kamuthi Solar Power Project, one of the largest solar photovoltaic plants in the world. The company has now become the seventh-largest in India by market capitalisation.
The shares of Adani Green have surged over 50% in the last month. The company reported consolidated revenue of Rs 1,471.0 crore and net profit of Rs 49.0 crore during the third quarter of FY23.
Adani Total Gas
Adani Total Gas is a Natural gas distribution company of the Adani Group. It is developing City Gas Distribution (CGD) networks to supply the Piped Natural Gas (PNG) to the Industrial, Commercial, Domestic (residential) sector and Compressed Natural Gas (CNG) to the transport sector.
Adani Total Gas posted a net profit of Rs 127.61 crore on a revenue of Rs 891.33 crore during the quarter ended December 2021. The stock has jumped over 120% in the last one year till date, while Sensex has gained 17.87% during the same period.
Another Adani group firm with a very high valuation is Adani Power, the largest private thermal power producer in India with capacity of 12,450 MW. Gautam Adani-led Adani Power’s market capitalisation recently crossed Rs 1 lakh crore, becoming the sixth Adani Group company to achieve this fate.
Adani Enterprises, the flagship entity of Adani Group, is an incubator focusing on establishing diverse new businesses. The company is focused on businesses related to airports, data centre, roads, water, defence, edible oil, solar manufacturing, etc. Adani Enterprises has 122 subsidiaries as of March 31, 2021.
Costliest stocks on D-Street
Many Indian companies’ shares trade at a price in multiples of thousands of rupees. Such high share prices have nothing to do with the valuation of the companies. Here’s a look at the top 10 costliest shares based on the current share price.
|Honeywell Automation India
|P & G Hygiene
The shares of tyre manufacturer MRF are trading at levels above Rs 71,000 apiece on the bourses and are the costliest among all listed companies in India. The stock hit a 52-week high of Rs 87,579.85 on October 11, 2021. The market capitalisation of MRF is Rs 30,227.16 crore. The company is trading at a P/E of 35.95.
The reason behind such a high price is that the stock has never gone for a share split.
Page Industries is an Indian manufacturer and retailer of innerwear, loungewear, and socks. The company is the exclusive licensee of Jockey International in India, Nepal, Sri Lanka, Bangladesh, UAE, Oman and Qatar. Page Industries shares are currently trading at a PE of 112.74. It market cap is Rs 51,883.69 crore.
Honeywell Automation India
A Fortune India 500 company, Honeywell Automation India is an integrated automation and software solutions provider, including process solutions and building solutions. It has a wide product portfolio in environmental and combustion controls, and sensing and control, and also provides engineering services in the field of automation and control to global clients.
Its market cap is Rs 36,545.77 crore. The shares hit a 52-week high of Rs 47,400.00 apiece.
Cement manufacturer Shree Cement is the biggest cement maker in northern India. It produces and sells power under the name Shree Power and Shree Mega Power.
The company’s market cap is worth Rs 94,589.11 crore. The shares hit a 52-week high of Rs 31,441.05 and a 52-week low of Rs 21,667.50.
3M India is an abrasive products company and has a diversified portfolio of products in dental cement, health care, cleaning, etc. The stock has fallen 21.10% year-to-date.