look news india
The benchmark indices continue to make new highs almost every day.
This has led to a heated debate on whether the stocks have outperformed their fundamentals and should they continue to earn at this valuation? However, only time will tell if the potential growth in earnings is in line with the current valuation of Nifty 50. The earnings for FY2023-24 are around 25 times the last five years. Profits and stock prices in Indian industries have moved hand in hand. Which reinforces the point that the markets have become slaves to earnings growth. Nifty's profit growth was good in FY2022-23 and 2023-24. But profit growth was not fast in previous years.
The earnings of Nifty-50 companies grew at a compound annual growth rate (CAGR) of 18 per cent between FY18-19 and FY23-24, reflecting the increase in market capitalisation during this period. This suggests that the market is trading at reasonable valuations. However, the Nifty-per-share figure for FY23-24 is Rs 989. If the Arding Compound remains at 15 and valuations also remain at current levels, the index will trade at 26,000 by March 2025. Of course, experts have different estimates for Arding Compound growth and valuations.