LETTER

It would be much appreciated if an article could explain the pricing of different shares. For instance, why is Shree Cement priced at Rs 30,000 and Ultratech is around Rs 6,500?

- Nand Kumar 

Editor Responds: Thank you for writing to us and asking us an interesting question on a subject that concerns all investors. Shree Cements has been delivering extremely good growth. The previous quarter the cement manufacturer declared a two-fold jump in consolidated net profits. Such superlative growth allows Shree Cements to fetch premium valuations and hence it is trading at a PE multiple of nearly 50. Grasim is trading at half the valuation of Shree Cements with PE of about 21. Better profitability, earnings growth, cost efficiencies, capacity utilisation and operating leverage are the some of the reasons why Shree Cements is doing well and trading at higher prices when compared to other cement companies. Hope we have answered your query. Keep writing to us with such pertinent observations.