[Nitin Bhatia]

Hello Sir,

Thanks for all your wonderful knowledge. Please consider my question to answer.

There is ABC Company which has 3 Lakh Crore M-Cap. Its has holding in another 3 different company worth of 2 Lakh crore. Now here while calculating the P/E ratio normally we do M-CAP/profit,

Consider , ABC has 12,000 Crore of profit. One way which I know is

3Lakh/ 12K = 25

If we deduct its holding in another company i.e. 2 Lakh crore from 3 Lakh crore then it will be 1 Lakh crore. Now if we calculate P/E ration then

1 Lakh/ 12K = 8.33

Here , 8.33 looks very attractive than 25 P/E ration.

I want to know your opinion on this. Please clarify

[Nitin Bhatia]

It is not advisable to deduct holding of another company. The reason being 2/3rd fortune of ABC company is dependent on the company in which it has holding.

[Author]

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