Many have always wondered how to calculate the Earnings / EPS of Bombay Stock Exchange’s 30 stocks benchmark Index – the SENSEX. It is a very easy and the process is highlighted below.
The EPS of Sensex is the sum of all the individual companies EPSs considered on a pro-rata basis on the available floating stock of the company.
Lets analyze what does this mean, First, have the list of 30 companies which constitute the SENSEX in a spreadsheet. Or download the spreadsheet from BSEIndia.com. Now, all you need to do is get individual EPS of each company independently. This EPS must be taken on a pro-rata basis depending on the availability of the free float for calculating the BSE Sensex EPS. (i.e non-promoter holding, it is readily given by BSEIndia) Make another column in your spreadsheet and multiply the EPS the company reported by the Adjustment Factor.
For example, lets consider ACC. ACC reported an EPS of Rs 72.70 for FY-2008. The Adjustment Factor for ACC is 0.60, means 60% of ACCs stock is free floating stock [or non-promoter non-locked in stock] Multiplying 72.70 * 0.60 = Rs 43.62 is ACCs contribution to SENSEX EPS.
We are attaching the Spreadhseet for your ready reference which you can download and use it in every way you want to. Kindly feel free to post any questions you have in mind.
The current excel sheet contains wrong data for free float. The method is correct but the free float data is wrong to calculate the sensex eps.
I have used the data provided by http://www.bseindia.com/downloads/about/INDICES.zip
and hence it is should be error-free.
using your data the PE comes to 15 .what is historical pe say for last 10 years
Can you please provide a similar spreadsheet for calculation of Nifty’s EPS?
RK,
Here is historical forward P/E for SENSEX since 1990,
http://www.dalalstreet.biz/2008/05/bse-sensex-1990-to-2008.html
I want to create my own nifty PE chart in my metastock . Please tell me how to get data . Regards-
Is investing is these 30companies that constitute sensex is much beneficial as compared to investing in any other share?
For this you can choose one of the ETF which are bench-marked against Sensex and they hold only 30 Sensex Companies. But you can read our Mutual Funds sEction and pick one of the funds which has consistently beaten Benchmark.
This seems to be wrong method. Taking examples from attached spreadsheet,
Your calculated sensex EPS comes to 919.806 out of which Grasim constitutes 182.625 which is 19.85%. That means if Grasim shows 100% EPS growth next year, Sensex EPS will increase by approx 10%. But Grasim does not have 20% weight in sensex at all.
The flaw here is EPS is taken into conjunction without considering number of free float shares for every company. As a result, even a small company will have huge EPS & a large one will have small EPS in this method.
@nikihil you are forgetting the adjustment factor.