BSE500 headline P/E declines, but value of most companies rises

The index's current average P/E is, however, nearly 20 per cent higher than its 10-year average P/E multiple of 22X

The headline valuation of the broader market has declined in the past one year owing to a sharp rise in the profitability of companies in cyclical sectors such as banking, metals, and oil and gas.

However, a majority of the listed companies have seen a rise in their valuations in the past 12 months.

The average price-to-earnings (P/E) multiple of BSE500 companies is down sharply from 35.6X at the end of January 2021 to a five-year low of 26X on Wednesday, based on the companies’ trailing 12 months’ net profits on a consolidated basis.

The index’s current average P/E is,