Hi,
if we assume that only 2 parameters drive the price ‘PE’ and ‘earning’.
So in column we have a range of PE starting from 10 upto 100 and in row earning growth from 5% upto 30%.
In the 2nd table, at the top we have assumed the expected returns of 15% for 5 years, so the price should be 280 rs.
The table highlights all the scenarios where you can achieve this return. So in case of Finolex table you won’t achieve 15% in 5 years if PE is <10 and growth for 5 years <10, in all other scenarios you have probability to achieve this return, but in case of LTTS you have to have higher growth or higher PE to achieve this.
Again the table just has to be used as an indicator as to what are the odds to achieve the expected returns.
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