Dalal Street Investments

Indian Economy Back to 1995-2003 Years + Thank Congress & Manmohan Singh

August 20, 2013

FII Mover & Shaker of Indian Market, Citigroup Equity Research has set the undertone of to be Bearish on India. Citi says that India has gone back to its old normal (FY95-03): lower growth, higher uncertainty and yes, lower market multiples

The macro-economic levels: be it its fiscal deficit, which it reduced from 6%+ to under 3% over the 2003-08 period; inflation – which it sustainably reduced to sub 5% in the 2001-03 period; and its currency, which appreciated almost 25% (Rs49 to sub Rs40) over 2001-07. These no doubt were very strong growth years, boosted by global capital, but there was method and direction from the policy makers. Can this be done again?

India’s ‘new normal’ valuations will likely be its old, 1995-2003, valuation averages which is about 12.5X Fwd P/E multiple as you sync your growth and macro parameters with that period you should also align the multiples.

All of India’s markets (Rates/FX/Equity) have hit lows. India has been a laggard among weak EM peers, and this has raised the risks of a market-induced spiral even from here They have Set Market Target; 12.5x 1 Yr fwd earnings, or a Sensex target of 18,900 (+3%).

[In our opinion Sensex target will likely get revised downwards as earnings slide in the coming quarters. EPS Estimates for FY2014 realistically will be 1275 and 12.5x will give us the magic number for SENSEX at 16,000]

We should Thank the Corrupt and Scandalous Congress Government led by Dr Manmohan Singh for F****ing the Economy which is impossible to be repaired in the near term.


2 Responses to “Indian Economy Back to 1995-2003 Years + Thank Congress & Manmohan Singh”

  1. Indian Equity Valuations to Contract Reflecting Lower GDP Growth - Sensex Target | Dalal Street on August 28th, 2013 1:28 PM

    […] Equity Analysts were the first to come out and boldly question Why Indian Equities which are already overvalued compared to Emerging Economies must Trade at a high… when the Policy Paralyzed and Lip Service Government is delivering the Worst GDP Growth of Decade […]

  2. BoFA-Merrill SENSEX Target Swings Widely - 16,000 to 20,500 | Dalal Street on August 30th, 2013 2:18 PM

    […] of USD against Indian Rupee and Decade Low GDP Growth Citi Analysts Questioned the Rationale behind India Quoting at 14 P/E on forward earnings when Bank’s Asset Quality is questionable as the Government Relaxed NPA reporting norms for […]

Got something to say?