Muthoot Finance

There are many reasons for that. Longevity of the business, sustainable growth, competitive advantage, market share, innovation in products, trustworthy and able management, other sectors not performing at the same time, institutional holding etc etc.

Often overlooked is the high PE period, when only a few sectors are relatively better performing, so many are flying to those counters where the activity starts and increase, safe haven buying. Look at Page Industries thread or other such threads to know more, such threads are great reads, because we get to see investors’ and outsiders’ point of view, optimism, biases, warnings everything exists. Some threads in VP are filled with such knowledge that they are no less to popular books of investing.

And of course the fall of PE, reversion to mean or sane levels will also have the reasons, institutions find other counters, increased competition, management’s guidance misses, turnaround of other sectors, so inevitably the high PE wont sustain if there is materialistic impact on the business, and it falls, or at least goes into time correction.

Not to mention the obvious that each company is different, and some stocks defy and sustain such elevated PEs, if not go even higher.

I am yet to experience everything said above, because I did not get the opportunity to experience all of it. Hence bull and bear markets both teach a lot of lessons.