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Half of BSE 500 Firms Trail 5-Year Valuations
30 Sep
Summary
- Over 50% of BSE 500 companies trade below 5-year average.
- Nearly two-thirds of these firms provided no returns in 2 years.
- Geopolitical tensions have caused energy price volatility.
Analysis reveals that over 50% of companies within the BSE 500 index are trading below their average valuations from the last five years. This indicates a prevailing weak market sentiment among these organizations.
Furthermore, a significant portion, close to two-thirds of these companies, have not generated any returns for investors over the past two years. This trend mirrors the performance of the BSE Sensex, which has also retreated significantly from its previous peaks.
Geopolitical uncertainties, particularly in West Asia, have led to volatile energy prices. This has resulted in increased logistics and commodity costs on a global scale, impacting international demand for goods and services. India, being a net energy importer, is particularly susceptible to these global economic pressures.
Among the analysed companies, 97 firms have failed to earn returns in the last two years despite reporting earnings improvement in each of those fiscal years. This situation is more pronounced in non-banking and finance companies, with 56% trading below their five-year average price-earnings multiples.
