Tuesday, November 3, 2009

Some more EPS

Let's have a look at some more EPS numbers as shown in the table:






IndexJan 7, 2008Nov 4, 2008March 9, 2009Today
BSE5008882.28/30.04 = 295.673879.58/12.8 = 303.092983.02/11.72 = 254.525945.36/19.67 = 302.25
SMLCAP13975.19/23.17 = 603.154035.11/6.37 = 633.452866.68/5.94 = 482.616741.24/15.33 = 439.74
CNX5005500.15/27.06 = 203.262421.25/12.42 = 194.951966.85/11.24 = 174.993727.45/17.6 = 211.79


From the above EPS numbers it is clear that the biggest variation in EPS was in BSE SMALL CAP index. The EPS went down from 633.45 in November 2008 to 439.74 today, a decrease of 30%. The SMALL CAP index was trading at a P/E of 23.17 in January 2008 and came down to a P/E of 5.94 in March 2009, a correction of 75% in P/E itself. The earnings went down by only 24% from 633.45 to 482.61. But the slide didn't end in March. The earnings declined to 439.74 today. Some of it has come due to changes in index constituents but a lot of it has come from profit declines. The SMALL CAP index went down from around 14K in Jan 2008 to 2.8K in March 2009, a correction of around 80% in around 15 months. If you consider the peak earnings of 633.45, at a level of 2866.68, the P/E came to around 4.53.

Surprisingly, Both BSE500 and CNX 500 EPS have gone beyond what it was in January 2008 but P/E has contracted and so the index values are still 33% below their lifetime high made in January 2008.
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