Industry Multiples in India Report 2023—22nd Edition

Foreword Dear Readers, We are pleased to introduce the 22nd edition of ourIndustry Multiples in Indiareport. This report provides an overview of trading multiples for variouskey industries in India as of December 31, 2023, using constituents belonging to the Standard and Poor’s (S&P) BSE LargeCap, S&P BSE MidCap andS&P BSE SmallCap indices. Per theWorld Bank’s Global Economic Prospects report, global growth is expected to witness a third consecutive year of deceleration, impacted by theeffects of tightened monetary policy, restrictive financial conditions and weak global trade growth. After growing 3.0% in 2022, the global economy hasweakened to 2.6% in 2023 and is expected to decelerate sin 2024 with 2.4% growth. This deceleration reflects softening labor markets, reduced savingsbuffers and waning pent-up demand for services. According tothe World Bank’s Global Economic Prospects report, real GDP growth forecast for advanced economies for calendar year 23 is 1.5%, whichis anticipated to fall to 1.2% in CY24. For developing economies, growth is forecasted at 4.0% in CY23 and anticipated to fall slightly in CY24 to 3.9%.Global headline inflation is expected to fall substantially to 3.7% in CY24. This is due to moderating energy and food price inflation, recovery of supplychains and slowing demand for consumer goods. Inflation is still above pre-COVID-19 levels, but it is closer to central bank targets. Umakanta Panigrahi Managing Director,Valuation Advisory Services Per the Asian Development Bank, the outlook for developing Asian countries remains solid despite global headwinds. The forecast for 2023 is revisedupward to 4.9% while outlook for 2024 is maintained at 4.8%. India expects to achieve an annual growth of 7.3% for fiscal year ending in March 2024.These are early projections for 2023–24 per the National Statistics Office (NSO). According to the World Bank, India will remain the fastest-growingdeveloping economy, growing at 6.4% and 6.5% in FY25 and FY26, respectively. The FTSE rose by 3.0% between Q3 CY 2023 to Q4 CY 2023, whereas DAX and EURO STOXX 50 rose by 9.9% and 9.3%, respectively, during the sameperiod. Further, the S&P 500 and MSCI World Index rose by 11.2% and 11.6%, respectively, from Q3 CY 2023 to Q4 CY 2023. India’s BSE Sensex and NSE Nifty 50 stock indices rose by 10.3% and 11.3%, respectively, from September 2023 through December 2023 and increasedby approximately 10.5% and 11.5%, respectively, since the high of Q4 CY2023. Metals and Mining We observed that the market capitalization of companies in the metals & mining industry considered in our analysis has increased by 13.0% from Q3 CY2023 to Q4 CY 2023. According to media reports, the outlook for the metals and mining industry is positive. In 2023, India’s robust infrastructure-backeddemand was met with the aid of imports. However, in 2024 the industry is expected to fill production gaps and reduce reliance on imports, with the aidof policy reforms, incentives and large-scale expansion plans of industry leaders. Foreword – Continued Software Services (Application Software) The market capitalization of companies in the software services industry considered in our analysis has increased by 21.2% from Q3 CY 2023 to Q4 CY2023. According to analysts, optimism over Software-as-a-Service (SaaS) companies will drive revenue for the IT sector in 2024. Engineering researchand development (ER&D) will remain a bright spot. According to analysts, expenditure in IT operational technologies and smart manufacturing in theautomotive and aerospace industries will drive revenue growth for Indian ER&D firms. Cement – Construction & Engineering The market capitalization of companies in the construction and engineering industry considered in our analysis has increased by 18.0% from Q3 CY 2023to Q4 CY 2023. According to media outlets, government-led infrastructure spending is a key reason for the robust outlook. Under the Pradhan MantriGati Shakti scheme, over 100 big-ticket infrastructure projects are being considered, with a focus on railways and highways. According to analystreports, government spending on such projects and the revival of housing sector is expected to keep utilization rates healthy. Cement companies areexpected to add 35 million tonnes (MT) capacity between 2023 and 2027. This capacity expansion anticipates an investment influx of around INR 1.1lakh crore in the same period. Umakanta Panigrahi Managing Director,Valuation Advisory Services Consumer Finance We observed that the market capitalization of companies in the consumer finance industry considered in our analysis has increased by 6.0% from Q3 CY2023 to Q4 CY 2023. Per media reports, retail lending grew 18% year on year in 2023, driven by continued growth in unsecured lending. According tothe latest Reserve Bank of India (RBI) credit growth data, personal loans and credit card spending grew by 22% and 28%, respectively. India now has~94 million serviced credit c