Valuation of shares

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Hardik Thakkar (Querist)
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23 August 2013 What is the basis of a stock or share is being valued sound or good? Is it through the EPS method? If that is so, there are companies whose market value is 2.5 times or 3 times of the EPS, whereas there are companies which is having 45 times of EPS like NESTLE, page industries 43 times, BOSCH 30 times, oracle financial services 23 times of EPS and these companies are traded a lot in daily, whereas someother companies having 3times or 5 times of EPS doesn't trade much in the market. How to go about it as i am novice and planning to trade intraday(Rs1,00,000/- my share received from the share of ancestral property). Your valued suggestion will help me out to decide.

CA Kintal Shah

CA Kintal Shah (Expert)
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15 September 2013 it is not just EPS which decide price but there are lots of factors which affect share prices.

You can see that prices move sometimes 5-10% in a day. This is because of some news which may be +ve/-ve for company's future.

EPS talks about history and expected EPS and PE is more important in market.

You will be surprised, there are few companies who trade even below their Book Value. But still noone buys them.

Its better you invest in company which is long term good track record and also only with the intention of staying invested for longer period(atleast 6months). Dont change your view/opinion in 5-10min after buying shares.

Good luck