I agree that in some cases PE is high due to temporary phenomenon such as margin contraction or consumer slowdown.
What triggered above post is while I was going through the list of companies in my watchlist that can be considered as good quality business, in most cases valuation seems to be stretched. I don’t mind paying extra premium for quality but even after that I don’t feel confident enough.
For example last year I have taken shelter under PSU due to better MOS and dividend while growing at fair rate, I thought looking into IT as it is underperforming for a while but no companies available at under 20 PE in that case as well.
Again I know PE is not the only parameter but in case such as IT PE and Div yield is usually a good indicator when you can consider adding them in portfolio and what worries me, as I mentioned in the above post, is that people are becoming very confident about paying a 70 PE for businesses like Kalyan Jewellers
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