Sensex valuation hits lowest level in over 15 months

The index is up 20% YTD against 50% growth in underlying EPS

- KRISHNA KANT

The valuation of the BSE Sensex, or the price-to-earnings (P/E) multiple relating to the 30 companies comprising the index, has declined to its lowest level in over a year. This is owing to a surge in corporate profitability in the last two quarters, leading to an increase in earnings per share (EPS), and weakness in the market.

The index is trading at a trailing P/E multiple of 26.8, the lowest since August last year. In comparison, the index underlying EPS reached an all-time high of ₹2,136 at the end of H1FY22.

With this, the index underlying EPS is up 50 per cent since the beginning of this calendar year and has increased nearly 20 per cent over the pre-pandemic high EPS of ₹1,795 after the Q3FY20 earnings.

The index valuation was the highest in March this year when it was trading at a P/E of around 35X.