I want to know about PE ratio of IRCTC . before stope split and after split …can anyone please help to to understand the PE ,of this stock , please share link of possible to read or screenshot for better understanding
Thanks in advance
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P/e ratio is market price / EPS.
A split affects both price and EPS.
So, p/e will change.
Current p/e is around 150 I think.
PE ratio won’t change because of split. Both EPS and MPS are divided by the same value. If PE is changing its only because of change in CMP
I don’t think so,
PE = LTP / EPS.
After stock split,
- LTP will reduce
- EPS will also change
Eps is divided by no. of shares, after stock split no. of shares will increase.
So, EPS will also change after stock split.
(Correct me if I’m wrong)
I think the ratio will not change as data should be taken on the end of day on the last day before stock split and the first day early morning after the split. Subsequently if you take the value, it will change as the market value of the share will depend on market forces.
Don’t stick to the formula alone.
How is EPS calculated?
EA to ESH / No of shares
How is MPS calculated?
Total Market cap / No of shares.
Since both are divided by No of shares I can also get one more formula for PE ratio
Total Markey Cap / EA to ESH
Am sure you agree on neither of Total earning or Market cap is going to change because Split.
So there you go… Absolutely no difference because of split.
PE does not change on stock split.
For eg. In case of IRCTC one stock was split into 5. So market price post split became 1/5th of original and even EPS will reduce to 1/5th of original.
So overall PE ratio remains same pre and post split
But EPS will change, right ?
So, as both are changing the P/e will not change.
Is that what you are trying to tell ?
Yes both price and EPS will reduce by same amount. So PE will not change
If PE could be changed o easily everybody would give out bonus and split shares to make their shares trade at a low PE.
PE is a valuation ratio.