Post the NDA win at the center the euphoria has touched upon almost all stocks, with most small and midcaps rallying 50-100%. Here's a quick look at the performance of portfolio & watchlist stocks over the past one year period.
Note: Adjusted EPS is arrived at by adjusting for one off expenses and revenue items. As obtained from screener.in
The stock price growth being a resultant product of earnings growth and expectations growth, some stocks have rallied on the basis of superior earnings growth supported by moderate PE expansion (Ajanta, PI Industries) while in case of others there is huge increase in expectations (Astral, Mayur) with moderate earnings growth.
Perhaps the showcase example from this lot is that of Kitex Garments, which shows a strong earnings growth(95%) coupled with huge P/E expansion(98%) is the best recipe for success. The stock posted a 1 year trailing returns of 286% !!!
Also, stocks with muted earnings growth and high expectation look expensive but only on a trailing basis. Their low earnings base will help them post superior earnings growth, which at the existing P/E too will yield superior returns. Case in point being Hawkins Cookers.
One might argue that trailing P/E being meaningless as the market tend to discount forward earnings only. However, in cases like Astral Poly - where a lot of expectations are already priced in - significant upside in price terms can only be realized if the company is able to sustain and build upon the already expanded P/E backed by superior earnings.
Note: Adjusted EPS is arrived at by adjusting for one off expenses and revenue items. As obtained from screener.in
The stock price growth being a resultant product of earnings growth and expectations growth, some stocks have rallied on the basis of superior earnings growth supported by moderate PE expansion (Ajanta, PI Industries) while in case of others there is huge increase in expectations (Astral, Mayur) with moderate earnings growth.
Perhaps the showcase example from this lot is that of Kitex Garments, which shows a strong earnings growth(95%) coupled with huge P/E expansion(98%) is the best recipe for success. The stock posted a 1 year trailing returns of 286% !!!
Also, stocks with muted earnings growth and high expectation look expensive but only on a trailing basis. Their low earnings base will help them post superior earnings growth, which at the existing P/E too will yield superior returns. Case in point being Hawkins Cookers.
One might argue that trailing P/E being meaningless as the market tend to discount forward earnings only. However, in cases like Astral Poly - where a lot of expectations are already priced in - significant upside in price terms can only be realized if the company is able to sustain and build upon the already expanded P/E backed by superior earnings.
