Distributional Characteristics of Price Earnings Multiple in Indian Stock Market

Abstract

Price Earnings (P/E) is commonly used by investors and market analysts in comparing potential profitability of different companies or industries. Cross sectional distribution of P/E multiple is a critical step in its application. It develops a good sense of how multiple is distributed across the entire market which can be very useful in sectoral analysis. Though thoroughly documented but most of the studies in price earnings multiple are related either to the effect of price earnings multiple or its determinants. Recognizing the significance of distributional characteristic of price earnings multiple, this study has been conducted to observe and analyze distributional characteristic of price earnings multiple in Indian stock market.