Would you pay 500 times a company’s earnings to buy its stock? That is, for every rupee the company makes, would you pay Rs 500? To put it in yet another manner, if the company continues to make Re 1 of Earnings Per Share (EPS) every year till perpetuity, would you be willing to wait for 500 years — something like six to eight generations — for returns to accrue? Your answer would probably be, “No way, not when I can get hundreds of pedigreed stocks available at less than a 10th of this value!” You would, therefore, not buy Unitech (PE: 353), you would not touch Mahindra Gesco (305), you would not go near Ansal Properties (113). You would ignore all realty stocks, including DLF Universal’s forthcoming 500 PE IPO.
Opinion in The Indian Express, May 18, 2006
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment