WEBULL

Brigade Enterprises Limited's (NSE:BRIGADE) Price Is Out Of Tune With Earnings

Simply Wall St · 04/10 04:51

Brigade Enterprises Limited's (NSE:BRIGADE) price-to-earnings (or "P/E") ratio of 34.4x might make it look like a sell right now compared to the market in India, where around half of the companies have P/E ratios below 24x and even P/E's below 14x are quite common. However, the P/E might be high for a reason and it requires further investigation to determine if it's justified.

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Brigade Enterprises certainly has been doing a good job lately as it's been growing earnings more than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

See our latest analysis for Brigade Enterprises

pe-multiple-vs-industry
NSEI:BRIGADE Price to Earnings Ratio vs Industry April 10th 2025
Keen to find out how analysts think Brigade Enterprises' future stacks up against the industry? In that case, our free report is a great place to start .

Does Growth Match The High P/E?

The only time you'd be truly comfortable seeing a P/E as high as Brigade Enterprises' is when the company's growth is on track to outshine the market.

If we review the last year of earnings growth, the company posted a terrific increase of 101%. The strong recent performance means it was also able to grow EPS by 548% in total over the last three years. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Turning to the outlook, the next year should generate growth of 14% as estimated by the twelve analysts watching the company. With the market predicted to deliver 25% growth , the company is positioned for a weaker earnings result.

In light of this, it's alarming that Brigade Enterprises' P/E sits above the majority of other companies. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. Only the boldest would assume these prices are sustainable as this level of earnings growth is likely to weigh heavily on the share price eventually.

The Bottom Line On Brigade Enterprises' P/E

We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Brigade Enterprises currently trades on a much higher than expected P/E since its forecast growth is lower than the wider market. Right now we are increasingly uncomfortable with the high P/E as the predicted future earnings aren't likely to support such positive sentiment for long. This places shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

Many other vital risk factors can be found on the company's balance sheet. Take a look at our free balance sheet analysis for Brigade Enterprises with six simple checks on some of these key factors.

You might be able to find a better investment than Brigade Enterprises. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).