EXPLAIN WIDE DIFFERENCE OF P/E OF EQUITY MUTUAL FUND SCHEME

POSTED BY bharat shah ON September 29, 2010 2:43 pm COMMENTS (2)

THERE IS TOO WIDE DIFFERENCE OF P/E OF (ANY) EQUITY M.F. SCHEME BY ‘VALUERESEARCHONLINE.COM’ AND P/E FORWARD OF THE SAME BY ‘MORNINGSTAR.CO.IN’ . FOR EXAMPLE , FOR HDFC TOP 200, IT IS 22.90 BY ‘VALUERESEARCHONLINE.COM’ , WHEREAS IT IS 16.87 BY ‘M0RNINGSTAR.CO.IN’.AS I UNDERSTOOD, THAT IS BECAUSE FORMER IS ON TRAILING YEAR EARNING AND LATTER IS ON FORWARD YEAR EARNING ESTIMATED BY THE ANALYST.BUT ON THOSE FIGURES , THE EARNING EXPECTATION BY THE ANALYST IS 22.9/16.87, I.E. 36%. IS IT REALISTIC? AND IF IT IS SO, WILL INDIAN SHARES  LOOK CHEAPER BY F.Y. 10-11 RESULTS DECLARED? SHARE YOUR VIEWS ON CURRENT MARKET TAKING P/E RATIO, 200MDA AVERAGES OR ANY OTHER PARAMETERS.

BHARAT SHAH

2 replies on this article “EXPLAIN WIDE DIFFERENCE OF P/E OF EQUITY MUTUAL FUND SCHEME”

  1. bharat shah says:

    thank you, manish! i can get solace that my question draw at least one attention!
    however my intention was slightly different. i like to draw attention towards ‘morningstar.co.in’ site, which is giving some information differently than ‘valueresearchonline.com’. one is p/e ratio of the fund. ”valueresearchonline.com’ is giving p/e based on trailing year earnings of the shares of the particular mutual fund scheme whereas ‘morningstar.co.in’ is giving p/e forward i.e based on forward year earnings of the shares of the same mutual fund scheme. if we go through both , we may have idea of the morningstar analyst future earning estimate. following are the figures, which i noted, and tried to grasp the future one earning growth:
    M.F. SCHEME P/E by VRP(B) P/E FORWARD BY MS(C) EARNING GROWTH
    ( B/C-1)*100
    BIRLA DIV. YIELD+ 17.48 10.79 62%
    DSP BR EQUITY 26.42 14.98 76%
    HDFC TOP 200 22.9 16.87 35%
    ICICI PRU DYNAMIC 19.82 14.58 35%
    ICICI PRU DISCOVERY 16.32 7.73 111%
    IDFC PREMIER EQUITY 39.41 18.63 111%
    QUANTUM LONG TERM 26.01 18.12 43%
    RELINCE RSF EQUITY 28.02 15.65 79%
    RELIANCE GROWTH 28.02 14.04 94%
    SUNDARAM SMILE 21.33 13.2 8 60%
    UTI DIV. YIELD 21.24 13.96 52%

    VERY HIGH FIGURES OF EARNING GROWTH RATE ESTIMATES! OR MAY I MISUNDERSTAND?

  2. High P/E Ratio Funds
    Investors should understand the implications of the level of the price-to-earnings ratio for a particular mutual fund. Funds that have a high P/E ratio are typically composed of stocks that have higher growth in earnings and sales, which is rewarded by the market with high multiples of price relative to earnings.

    Low P/E Ratio Funds
    Funds with a low P/E ratio are composed of stocks that have low growth expectations by investors. This may be due to the stock belonging to an industry that is in the trough of a business cycle, or may be related to company specific growth problems. Stocks with low P/E ratios are known as value stocks.

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