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LATEST NEWS UPDATES | Firms show increase in profits even as sales fall -Vineet Sachdev

Firms show increase in profits even as sales fall -Vineet Sachdev

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published Published on Nov 28, 2020   modified Modified on Nov 28, 2020

-Hindustan Times

The average PE (price earnings) multiple of Sensex companies , which measures the price of a stock as a multiple of its earnings per share, has risen to 31.49 in the current month, the highest since 1998-99 .

The BSE Sensex, India’s benchmark stock market index, reached an all-time high of 44,825 on Wednesday, November 25. There is reason to believe that speculation and external tailwinds, rather than strong fundamentals, are the main driving factor behind this rally.

The average PE (price earnings) multiple of Sensex companies , which measures the price of a stock as a multiple of its earnings per share, has risen to 31.49 in the current month, the highest since 1998-99 . Net foreign institutional investment thus far this year is Rs 1.56 lakh crore (as of 27 November) compared to Rs 40,422.92 crore in the same period last year. The latest quarterly results of 30 companies comprising the BSE Sensex show that corporate profits turned the corner in the second quarter (July-September) of the current fiscal year.

Inflation-adjusted net profits of these companies, which declined by 45% year on year in the quarter ending June, increased by 24% year on year in the September quarter. An HT analysis of at least 2,400 companies using the Prowess database of the Centre for Monitoring Indian Economy (CMIE) shows that this trend holds for the larger universe of companies as well. This recovery in corporate earnings, however, should not be inferred as a broad based turnaround in the economy.

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Hindustan Times, 28 November, 2020, https://www.hindustantimes.com/business-news/firms-show-increase-in-profits-even-as-sales-fall/story-z2joXwJAuUl5EoJBoKZy8J.html


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