Asian Sales growth is not 25%, but around 15%. Then the question remains, why Is the market paying 60PE for Asian?
I think, one factor is that a bulk of the money chases certainty as fund managers need to show annual performance. Their job is even more tough now as the markets have too much liquidity lately, Mcap to GDP ratio is a good measure of that.
Putting both the factors together, there is massive money chasing stocks that display certainty, which is why 50% of the [growth in Nifty 50, in the recent times, had come from growth in mcap of only 3 stocks] (https://www.google.com/amp/s/www.livemint.com/Money/pXYezxo5piGz9IEcWdJjpL/Only-3-stocks-responsible-for-over-50-of-the-rise-in-Nifty.html%3Ffacet=amp)
Should there be a hiccup in the company, or the country or it’s economy, or something global, and suddenly either the excess liquidity is squeezed or economic prospects appear hampered, then this money which is only after certainty will park itself in stocks and bonds. This is the nature of this money, to chase certainty.
I think, a retail investor has an advantage here. He isn’t under annual performance pressure, he should give up the need to see certainty in the current fiscal. So, he could pick his stocks that are available at reasonable PEs due to near term slack, but long term prospects are good and intact beyond any reasonable doubt.
In his attempt to seek out value, the investor must have a very strong sense of:
A. The amount of risk he is comfortable with. If you can’t wait beyond two years, then don’t but mid or small caps.
B. Have a reality check in your stock picking skills
Pharma Auto Cement stocks are currently soft. Hence Risk reward ratio is better. Instead of paying 60PE for 15% growth (Asian). I’d happily pay 18PE for 10% growth (ACC Or Herohonda or Cadilla).