Is Sensex Cheap? - Part 2

I had put an estimate of thirty Sensex companies in the first part of this article. It seems that the first quarter results are out and there are surprises - both positive and negative. I want to revise the estimate as below. Also Ranbaxy has been replaced with Hero Honda Motors.

Company	Net Profit FY2010E	Free Float	Free Float Profit
ACC	1500	0.55	825
Bharti	9000	0.35	3150
BHEL	3750	0.35	1312.5
DLF	3500	0.25	875
Grasim	3000	0.75	2250
HDFC Bank	2650	0.85	2252.5
Unilever	2250	0.5	1125
Hero Honda	1800	0.5	900
Hindalco	2000	0.65	1300
HDFC	2800	0.9	2520
ITC	3750	0.7	2625
ICICI Bank	4000	1	4000
Infosys	6500	0.85	5525
Jaiprakash Associates	1100	0.55	605
L&T	4000	0.9	3600
M&M	1600	0.75	1200
Maruti	1500	0.5	750
NTPC	9750	0.15	1462.5
ONGC	17500	0.2	3500
RCOM	7000	0.35	2450
RINFRA	1750	0.65	1137.5
RIL	20000	0.5	10000
SBI	15000	0.45	6750
Sterlite	4000	0.4	1600
Sun Pharma	1500	0.4	600
Tata Motors	1250	0.55	687.5
Tata Power	1750	0.7	1225
Tata Steel	5000	0.7	3500
TCS	5750	0.25	1437.5
Wipro	4500	0.2	900
Total			69465

The major increase is coming from Cement (ACC, Grasim and JP Associates), Auto (M&M and Hero Honda), Tech (Infosys, Wipro, TCS), Power (NTPC, Tata Power) and Banks (SBI). The major decrease is coming from Oil and Gas (RIL) and FMCG (Unilever). The market cap of Sensex EOD - 5 August 2009 is INR 11,60,461 Crore at the index level of 15903.83. This makes a forward P/E of 16.7 not as cheap as it was when we estimated in May. The EPS comes out to be 952, 3.5% higher than 920, what we estimated last. Remember that many companies have diluted their shares or are looking to dilute. These include Tata Steel, DLF, Tata Power, RINFRA, Sterlite and HDFC. Some of that dilution has already been in the Sensex Market Cap. The last time we took the data, Sensex was at 13589.23 with Market cap of 981352. The latest index was 15903.83 with a market cap of 1160461. Thus index has increased by 17.03% but market cap has risen by 18.25%, i.e. 1.18% more.

People are still talking about 1050-1100 EPS of Sensex in 2010. I am not sure where they are getting their estimates from. This is still too early to comment since only Q1 results are out and three quarters left to go.