The stock is now 50% down since my last writing. As per company's own guidance for FY 09, its EPS will be max Rs.110(~$2.2), which means the stock is trading at a P/E of 11. The rate of earnings growth is now declining and in these recessionary times, even a 5-6% growth would be somewhat optimistic. The investors have turned cautious and fearsome to equities as an asset class and every stock will undergo a tight scrutiny before being considered as a safe investment. A prudent investor would want a stock's P/E to be less than or equal to its growth rate, and in fact most of the stocks are now trading at a much lower P/E of 5-6. By this simple measure itself, the stock still has afar way to go down before it offers a decent margin of safety to weather out the turbulent markets.
