A simple case study on why P/E can sometimes distort the picture… — Fundamental Analysis (Long term)

Fundamental Analysis (Long term)@fundamental3 · 45K subscribers Open in TelegramOpen

A simple case study on why P/E can sometimes distort the picture.

Revenue grew 40% and EBITDA grew 31% in Q1 FY27, yet PAT declined 25%, with PAT margins falling from ~11% to ~6%.

The interesting part is what happened below EBITDA. D&A increased 95%, finance costs rose 48%, while other income fell 33%.

So, despite a strong operating performance, the bottom line looked dramatically weaker.

This is why, when analysing a business, don’t stop at P/E. Look at what is happening between EBITDA and PAT, and understand what is driving the gap.

Sometimes EV/EBITDA gives you a cleaner view of the operating business than P/E.
The numbers are the hint. Connect the dots.

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