Valuation Metrics and Profitability Concerns
Shriram AMC’s valuation grade has recently shifted to “very expensive,” reflecting heightened market expectations. The company’s price-to-book value stands at 4.12, which is considerably high for the capital markets sector. More strikingly, the price-to-earnings (PE) ratio is negative, indicating losses rather than profits. This is corroborated by the negative return on capital employed (ROCE) of -10.85% and return on equity (ROE) of -10.79%, signalling operational challenges and weak profitability.
Enterprise value multiples such as EV to EBIT and EV to EBITDA are also negative, reinforcing the notion that earnings are currently under pressure. Meanwhile, the EV to sales ratio is extremely elevated at 73.62, suggesting that...
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