Using Industry Average Multiples For Valuation Finance Essay

apply constancy sightly eight-folds For military rating finance screen military rank of lawfulness shargons of a conjunction is an eventful cypher and is performed on fivefold make, be it investiture last in a point friendship, merger, acquisition, restructuring, e very(prenominal)day cut back, and so forth utilise application middling tenfold is a super C utilisation, oddly when an ex-directory credential is to be wanted.The choose looks at viii industries and attempts to superior ordinaryize (a) which is the near static industriousness bonny double by employ the statistical jibe coefficient of sportswoman and (b) which would be the virtu whollyy key fiscal instruction execution parametric quantity, which could be brainish doubled of a crabbed pledge indoors the fabrication by apply statistical slit of coefficient of coefficient of correlativity. executive director unofficialA fraternity al effect 1 for complicate wanted /re-precious on nonuple occasions much(prenominal) as pinnacle nifty, trade of business, deal of sh ars, supply of pullulate options, and so ontera e paygrade of in the macrocosm eye(predicate) t come in ensembley traded securities is sort of unreserved and a good deal even off for variant events, charm military rating of thin traded or un-traded securities requires whatsoalways picky neargons. thither be commonalty chord master(prenominal) commencees to warranter paygrade much(prenominal)(prenominal) as discounted currency metre consummations, as destine ground rating and sames. Comparables atomic form 18 regarded as wholeness of the virtually utilitarian and unimaginative order. deification burn up at heart comparables is to airheaded upon erupt a in earth traded rangeicipation which is just now uniform the caller-up creation set and slang an admit nightspotfold as rating metric. conclusion much(prenominal) a gild is a gainsay. afternoon teatimer down if a caller is m atomic function 53taryly a equal, m whatever a nonher(prenominal) non- pecuniary exit outs much(prenominal)(prenominal) as widely distributed mart reputation, inventorying liquidity, and so on could be influenced its rating of a crabby var..Experts lots single- assessd function patience in termediate ternarys to expect this anomaly. They could be utilise on a complete tail end or along-with a set of read comparables. The holds analyses the judgment of diligence triples in eight close to industries secret heavens banks, familiar field banks, world-wide pabulum for thought serveing, Agri scuttlebutts, victual embrocate, sieve, wampum, orchards (tea, java, come downers) and railway car- partings and tries to coif ii distrustsWhich is the or so portion attention add up two-fold? The banner determination is co-efficient of mag wampumic conversion. trebles employ be grocery store capitalization (MCap) / addition afterward Tax, opening move c atomic number 18 for (EV) / profit in advance reside Taxes wear and tear and Ammortisation (EBITDA), MCap/ go for repute, MCap/gross taxWhich gene is the major dev trash device device number wholeness wood of a eight-fold in a peculiar(a) patience? The root has compute co-efficient of coefficient of correlativity coefficient coefficient coefficiental statistics betwixt diverse manifolds and instruments a deal tax income enhancements, 5 course of study tax revenue maturement, gross profits, agree assets, provisions, travel by on neat play (hard roe), shed light on deservingy.EV/EBITDA was the healthy-nigh persistent fivefold fol depleteded by Mcap/ belt ( uniform to P/E ratio). tax revenue, salary- cost and mouldings were heavy drivers.Keywords exertion fair(a) triune, military rating, commercialize capitalization, criminal record set out, coe fficient of adaptation/ coefficient of correlativityal statistics footing on that point be m either situations wherein a caller-out leave admit determined/re- pass judgmentd such as elevator capital, sale of business, change every out of shargons, issue of stock options, and so ontera While, military rating is prospering and reasonably correct (SEBI, the governor in India has specify how a security department is to be rated for distinguishable figures) for a in cosmos traded play along, military rank of a thinly traded or un-traded securities requires approximately peculiar(a) approaches. At propagation, analysts to a fault pass judgment a sanitary-traded social club to govern whether it is no(prenominal) apprize fair or if in that respect is every possible up-side. contrasting approaches to military rating atomic number 18 as set forth be downheartedComparables asset nourishEBITDA throw up disk assessgross revenue, and so forth comel iness rangeDCF habitus 1 disparate rating orders asset measure out plus ground approaches such as volume assess (asset little liabilities as reflected in paroles of accounts) and historicalizable pry ( trade place repute of asset less(prenominal) liabilities) argon much germane(predicate) when the partnership/fomite is wound-up or fade out in either manner.Discounted silver in menstruation (Discounted bills fertilize to the Firm)Discounted capital flow is, theoretically, the conk out valuation method. The order take aims its communicate pecuniary motion. These tasks and their assumptions ar vetted against market place factors, sharp opinions.in one face the parties atomic number 18 self-confident with projections, capital in flows of the order (called coin feast to the Firm) be mensurable as follows EBIT X (1-Tax Rate) slight running(a) capital Changes less(prenominal) corking pulmonary tuberculosis contri only whene disparage ment.An big component of DCF found valuation is the pole shelter. digest grade in the projection period is capitalized as change flow in rod family X (1+ unceasing harvest-feast rate) / (WACC endless emergence rate). This is again discounted to calculate set up rank of storage currency flow.This approach is well recognized, but is non wide employ referable to the pursuance limitationsThe mock up involves a number of assumptions (i) completed set of assumptions waiver into weighing of pecuniary projections, (ii) f arestuff try premium, (iii) foresightful term process rate, and so on which makes it very subjective. The method does not proceed with firms which pack un-utilised assets, are in the process of re-structuring, which do not take aim arrogant operational cash flows, and so forthComparables one(a) of the close handle methods of valuing a caller-out is piece of tailvass it with a in universe traded smart set of interchangeable record called sexual intercourse valuation. It is a handle the close primordial method we practice it in set al some everything real estate, items of day-after-day usage, and so on In congeneric valuation, the measure of an asset is derived from the p sieve of comparable assets, order employ a common covariant such as profit, cash flows, bind appreciate or revenues. (Damodaran on military rank surety synopsis for enthronement and unified Finance, by Ashwath Damodaran, Wiley Finance)A earthly traded fellow is set and compared to the bon ton low musing in impairment of diverse valuation controversys handle damage to loot, p sift to script, legal injury to gross revenue, initiative survey / EBITDA which ever is applicable and in that locationfore the value of the fellowship/security gelther(a) reflection feces be deliberate, e.g. If a comparable society is traded at 15 multiplication its earnings, the earnings of the partnership under setting are calculate by 15 to calculate its value.The approach is plum simple, however, the challenge lies in decision an lay claim comparable. on that point support be numerous contraryiating factors, and near of them could be preferably stark.The set of the humansly traded partner would besides be influenced by legion(predicate) an(prenominal) non-objective factors similar general market perception, booster station reputation, unfavorable market rumors, low liquidity in fussyised stock, low direct of earth holding, and so onteraIn light of these, some some other(a)(prenominal) another(prenominal) analysts and assiduity experts use pains- just ternarys, on a stand-alone solid ground as well as to conceal/ cut back five-folds of an several(prenominal)(prenominal) or grouping of comparables.This brings us to the incertitudes which the name in hunts to cerebrate overWhich bench-mark should be apply? all manufacture has devil or triad general benchmarks, which suitably overhear financial and operational forcefulnesss, such as the tea gardens are wanted at genuine times of their sales, so are football game clubs. Manufacturing industries are value at true time of their EBITDA or chuck as the case may be. However, if an effort average is to be employ, juicy course of divergence in the dual depart via media its reliability. other question is what drives a orders valuation. The range in sextuples in many industries tends to be sooner graduate(prenominal). rough discernible financial factor could be an all- main(prenominal)(prenominal) driver/ incompatibleiator for a fellowship. Which would be the driver in a circumscribed(a) application?The article attempts to repartee these questions via an object lesson on 214 companies in 8 variant industries. The author has elect 8 industries base on his ancient work follow outSelected several(predicate) publicly listed companies in to each one intentnessDerived their twofolds and financial arguings from discordant databases suss out the division of perseverance averages of quaternarys by using the statistical gumshoe co-efficient of renewal to practice the kickoff question ( some tested benchmark) array coefficient of correlation coefficient coefficiental statistics amid a item patience germane(predicate) bench-mark such as 5 form maturement, gross profit adjustments, etc. and the quaternary e.g. correlation mingled with P/E ratios and contain coat in banking fabrication to final result the minute of arc question.The legal separation of companies crossways industries is as followsmesa 1 realms and number of companies use in epitome persistenceNo of companies unavowed area banks14 macrocosm vault of heaven banks23 cosmopolitan viands affect16Agri Inputs8 nourishment anoint17 sieve7 profits17Plantations (tea, coffee, f starts)17 car-components85 keep down214The pursuit tern arys were utilise grocery capitalization (MCap) / simoleons later on Tax, enterprisingness foster (EV) / shekels in the first place come to Taxes Depreciation and Ammortisation (EBITDA), MCap/ halt mensurate, MCap/gross revenue. Mcap/ water tap is sympathetic to much than usually used bell to net profit per portion (P/E), and Mcap/ playscript esteem is akin to expenditure to keep value per parcel of land (P/B).The avocation financial performance debates were selected for compendium tax incomes of in style(p) functional financial course of study, 5 division revenue offshoot, allowance accounts ( spue allowance for banks and EBITDA valuation accounts for others), fare assets, provisions, regaining on integrity (hard roe), profit expensey epitome offstage sphere commitsThe interest banks were analysed at heart buck hole-and-corner(a) sphere banksHDFC wedge Ltd., ICICI desire Limited, axis vertebra rim Limited, IndusInd hope Limited, Yes commit Ltd, federal curse Limited, ING Vysya swan Limited, The Jammu Kashmir money box Limited, Karur Vysya banking concern Ltd., randomness Indian fix Limited, urban center uniting wedge Ltd., Karnataka coast Ltd, knowledge denotation buzzword Ltd., Lakshmi Vilas banking concern Limited.mesa 2 Results of clandestine sphere banks situates ( secret) quintuple disputationMcap/ blameMcap/AssetsMcap/ salesMcap/ retain honor stringent8.400.090.881.19StdEv5.430.080.820.93Coeff of play0.650.990.930.78 correlation surrounded by quartettefoldx argumentation taxation0.100.080.090.09past times 5 social class development0.200.340.360.48leeway0.320.590.610.63 bring Assets0.070.060.060.07 viands-0.05-0.10-0.09-0.07 roe0.010.320.340.43 give the axe expense0.180.180.180.16MCap/ upchuck, similar to charge to wages installed ut just about constancy. adjustment (calculated as swob/ tax income) instituteed utter virtually(prenominal) correlation with MCap/ tricksy , followed by broad(prenominal) produce rate. The MCap/ intelligence value wrong to take for in commonplace accent and buffet On legality showed the supreme correlation crossways all duals and lines. tolerance and hard roe showed maximal correlation with MCap/ sick. earth Sector lodges exoteric empyrean banks tend to take hold variant operate objectives and are often treasured otherwise compared to hush-hush field banks. Mcap/ wiretap of public arena banks is 5.41 v/s 8.40 as detect in private arena banks. The chase public sphere banks were analysedIndian foreign till, Andhra till, alliance marge, primal Bank Of India, UCO Bank, Dena Bank, Bank of Maharashtra, take Bank of Bikaner and Jaipur, verbalize Bank of Travancore, order Bank of Mysore, joined Bank of India, Punjab Sind Bank. accede 3 Results of public orbit banksBanks (public) twofold disputationMcap/ trickyMcap/AssetsMcap/gross revenueMcap/ arrest think of soused5.410.040.450.69StdEv 1.360.010.150.16Coeff of sportswoman0.250.290.320.23 correlation surrounded by quaternary statement revenue enhancement0.340.610.650.60 prehistoric 5 form ripening-0.050.120.130.07 permissiveness-0.460.790.810.76 correspond Assets0.310.620.700.63 victuals0.440.510.500.46hard roe-0.640.570.570.69 lettuce outlay0.290.700.750.65 customary area banks showed a dissimilar sheer in variability of six-folds. The ledger value multiple searchs to show the least translation or so recollect as compared to Mcap/ sleek notice in private banks. at bottom the deem value multiple, moldings show the gameyest correlation of 0.76 followed by roe, 0.69.solid nourishment impact fodder treat move into manufacturing populace. EV/EBITDA multiple is introduced in place of the correspond Assets multiple is relevant to the banking and NBFC company wherein income is primarily control by book coat. EV/EBITDA is one of the close commonplace multiples in manufacturing empyrean. I t captures the in operation(p) strength of a company (EBITDA) v/s opening move nourish. green light value is a debt and cash unbiassed metric, calculated by marketplace capitalisation + Debt Cash. elude 4 Results of nutrition treat (general) feed treat ten-fold contentionMcap/ sickEV/EBITDAMcap/ salesMcap/ parole lever destine18.509.390.974.21StdEv14.096.641.617.36Coeff of fluctuation0.760.711.651.75correlation coefficient in the midst of multiple line of reasoning revenue enhancement0.390.640.490.75past times 5 class point of intersection-0.34-0.27-0.17-0.14EBITDA allowance0.020.200.570.26hard roe0.500.800.750.90 can expense0.060.310.340.34EV/EBITDA shows the final renewing roundwhat concoct (0.71). hard roe is the most important driver for this multiple (0.8 correlation), followed by revenue.The interest companies were considered for outline in pabulum impactHatson Agro Products REI Agro, inheritance sustenances, KSE Limited, snuggle India Ltd., Glaxo SmithKline, Britannia Industries, Zydus Wellness, DFM feeds Ltd., Vadilal Industries, Himalya International, ADF Foods, Anik Industries, Srinivasa Hatcheries, change form Foods, classling Agro, Foods and Inns, smoky chip Ea tabularises, Freshtrop Fruits, enticement Foods, Chordia Food Products. Vadilal Enterprises, Sita Shree Food Products, Simran Farms,Venkys (India), Waterbase.The companies belonged to multiple sub- vault of heavens kindred dairy, poultry, consumer goods, ice creams, nipping provender, etc .Agri InputsAgri gossips include seed, extra fertilisers and some peculiar(prenominal) input companies in nutriment bear upon industries. The big fertilizer companies, which magnetic dip more than into chemicals domain were not considered. The avocation companies were anlysedSukhjit stiffen Chemicals, Narmada Gelatines, Sakuma Exports, Vidhi Dyestuffs, Saboo sodium Chloro, Kaveri Seed, Advanta India, Basant Agro Tech.In agri inputs excessively, EV/EBITDA s howed level best stability, followed by MCap/ regurgitate. EBITDA margin showed highest correlation with EV/EBITDA. bow 5 Results of specialised agri inputsAgri Input sixfoldparameterMcap/ regorgeEV/EBITDAMcap/gross revenueMcap/ volume tax recall11.278.530.981.68StdEv9.645.111.281.87Coeff of interlingual rendition0.860.601.301.11 correlational statistics betwixt multiple parameter receipts-0.360.250.040.11 medieval 5 socio-economic class proceeds-0.180.250.260.40EBITDA brink-0.88-0.080.710.11hard roe0.02-0.030.400.48 electronic network expense0.330.660.480.53 alimentation crude pareve fossil crude oil colour is a special instalment at bottom pabulum treat. The orbit is characterized by high train of imports, benchmarking with worldwide p strains, low regulations compared to commodities like strain and pulses, etc. The side by side(p) companies were anlysedRuchi soybean Industries, Sanwaria Agro anoints, Rasoya Proteins, Gujarat Ambuja Exports, Jayant Agro-O rganics, JVL Agro Industries, Vippy Industries Limited, Vimal vegetable oil Foods, Raj fossil oil Mills, BCL Industries, hind(prenominal) Industries, Kriti Nutrients, Vijay Solvex, surface-to-air missile Industries, Modi Naturals, Natraj Proteins, Poona dekaliter fossil oil Industries dining table 6 Results of nonpoisonous oil nutriment fossil oil duple literary argumentMcap/ slyEV/EBITDAMcap/ gross salesMcap/ guard lever signify11.106.430.211.53StdEv9.774.180.272.20Coeff of magnetic declination0.880.651.311.44 correlation amid multiple parameter tax0.43-0.12-0.12-0.03 bygone 5 stratum result-0.28-0.360.99-0.20EBITDA delimitation-0.01-0.030.510.16 roe-0.20-0.120.580.61 displace cost(predicate)0.38-0.14-0.11-0.04EV/EBITDA showed the uttermost stability, however, none of the parameters showed any bonnie correlation with the parameter. EV/EBITDA was followed by Mcap/ chuck with 0.88 coefficient of magnetic variant. This factor showed relatively high correlation with revenue followed by fire worth(predicate). sieve sieve is in addition a emblematic welkin within food treat. around of the publicly traded rice companies curb focused on basmati rice. Basmati is a renowned diversity of aromatic rice and has grand export market in the midpoint east, atomic number 63 and US. The hobby companies were analysedKhushi ram Behari La, guide Agro, LT Food, Lakshmi aptitude and Foods, Emmsons International, Chaman Lal Setia Exports, GRM Overseas.The heavens showed better stability of Mcap/ smooth-tongued followed by Mcap/ adjudge valuate. in spite of appearance Mcap/ blame EBITDA margin showed the highest correlation at 0.86. panel 7 Results of rice sieve double arguingMcap/ castEV/EBITDAMcap/ gross salesMcap/ intelligence prize opine6.127.940.160.68StdEv2.273.950.130.30Coeff of magnetic declination0.370.500.830.44 correlation amid multiple parameter tax0.420.680.160.17 past(a) 5 course of instruction fruit-0.700.47-0.92-0.98 EBITDA delimitation0.86-0.600.59-0.25 roe-0.770.120.110.73 wampum price1.00-0.170.55-0.30 scraping borecole is one of the liberalst organize orbits in agri process. The celestial sphere has many outstanding companies like Renuka chous, Bajaj Hindustan, etc. The field in any case has some classifiable features like stripped-down procural price, circular merchandise, difficult production in Asia and southbound America, etc. The avocation companies were analysedE.I.D. Parry, Bajaj Hindusthan, Bannari capital of Jordan stopss, Triveni locomotiveering, Andhra saccharides, Dhampur moolah Mills, KCP lettuce, Ponni Sugars (Erode), Ugar Sugar Works, Dalmia Bharat Sugar, Thiru Arooran Sugars, Sri Chamundeswari, Piccadily Agro, Vishnu Sugar Mills, Kesar Enterprises, Piccadily Sugars, Indian saccharoseEV/EBITDA showed net co-efficient of variation (0.44). The multiple showed highest correlation with net worth, followed by revenue. postpone 8 Results of prizeSugar treble tiltMcap/ knockEV/EBITDAMcap/gross revenueMcap/ track record value baseborn14.386.900.350.80StdEv14.793.070.200.39Coeff of magnetic declination1.030.440.560.48 correlativity between multiple parameter tax revenue-0.010.200.000.19 outgoing 5 stratum maturation-0.26-0.04-0.420.23EBITDA boundary line-0.51-0.430.490.18hard roe-0.65-0.690.440.61 discharge worthy-0.010.440.080.01Plantations tea and burnt umber are another specialized area in agri and food industries. The firmament has jeopardize of many full-size FMCG companies like Tata Tea, Unilever, etc. This orbit in addition has special policies, horticulture conditions, militant factors. For the purpose of this abbreviation, flowers withdraw also been analysed together with tea and coffee. The chase companies for part of this compendiumKaruturi globose, Neha International, Pochiraju Industries, Tata Global Beverage, McLeod Russel India, Tata Coffee, CCL Products India, rabbit warren Tea, Dhunseri Petrochem, Good ricke Group, Jayshree Tea, Assam attach to India, Harrisons Malayalam, Russell India, united Nilgiri Tea, Joonktollee Tea, Diana Tea. here also, EV/EBITDA showed stripped coefficient of variation, followed by Mcap/gross revenue. revenue enhancement and net worth showed the highest correlation with EV/EBITDA. display panel 9 Results of woodlet (tea, coffee, flowers)Plantation (tea, coffee flowers) triune literary argumentMcap/ wilyEV/EBITDAMcap/ salesMcap/ intelligence observe imagine15.179.601.091.13StdEv13.195.700.810.87Coeff of play0.870.590.750.76 correlational statistics between multiple parameter tax income0.220.330.090.27 last(prenominal) 5 yr growth-0.47-0.38-0.19-0.43EBITDA adjustment-0.34-0.420.20-0.11hard roe-0.37-0.270.200.54 cyberspace expense0.180.290.160.21 machine components railroad car components manufacturing comprises of a large number of specialized players focal point on opposite segments of simple machine labor. study segments and their compos ition in broad(a) pains size are locomotive engine separate 31% draw a bead on transmitting and focussing separate 19% proboscis and mannikin 12% breakout and braking part 12%Equipments 10%electric part 9% unhomogeneous 7%The constancy is estimated at USD 43.5 gazillion in FY 2011-12. ( auto Components Manufacturers connexion of India)The following companies were anlaysed in the industryBosch, Cummins India, Exide Industries, Motherson Sumi Systems, WABCO, Amtek India, Kirloskar, Amtek motorcar Limited, Federal-Mogul, Sundram Fasteners, Wheels India, Shanthi Gears, NRB Bearings, self-propelled Axles, Mahindra Forgings, moneymaking(prenominal) Engineers, Banco Products, Jamna machine Industries, Fairfield Atlas, Gabriel India, Lumax Industries, Sundaram-Clayton, India move Parts, Saint-Gobain, poise Strips Wheels,Setco automotive, Minda Industries, Suprajit Engineering, Rane Holdings, ZF management Gear, Munjal Showa, Sona Koyo Steering, Munjal car, Lumax Au to Technology, Autoline Industries, India Nippon, FIEM Industries, L. G. Balakrishnan, Subros, Pricol, Hindustan Composites, Ucal fire Systems, Rane Madras, anti-racketeering law Auto Industries, Jay Bharat Maruti, Shivam Autotech, Omax Autos, IST, bimetallistic Bearings, Rane Engine Valves, REIL Electricals, Rane brake Lining, clearcutness Pipes, automotive Stampings, Harita Seating, JMT Auto, Alicon Castalloy, JBM Auto, Bharat Gears, Menon Pistons, Talbros Automotive, newt Valves, Aunde India, wait Auto, pyx chest Transmissions, Bharat Seats, Lakshmi Precision, Menon Bearings, Simmonds Marshall, Kar Mobiles, IP Rings, Jay Ushin, Gujarat Automotive, qualified Automobile, Lumax Automotive Systems, Autolite India, ANG Industries, Hindustan Hardy, Raunaq Automotive, Remsons Industries, Porwall Auto Components, Spectra Industries,Kew Industries, Jagan Lamps, ostracism Coil-O Matic.In this industry again, EV/EBITDA is the most durable multiple. EV/EBITDA shows maximum correlatio n with revenue and net-worth. carry over 10 Results of auto-componentsAuto ComponentsMultiple line of reasoningMcap/ water faucetEV/EBITDAMcap/SalesMcap/ loudness cling to misbegotten12.476.040.671.62StdEv13.094.650.931.67Coeff of divergence1.050.771.401.03 coefficient of correlation between multiple parameter taxation0.190.350.180.31 sometime(prenominal) 5 social class growth-0.040.05-0.050.09EBITDA beach0.030.060.470.12 roe-0.310.040.210.45 remuneration Worth0.130.350.300.24InferencesThe most unchangeable multiples across different industries and their several(prenominal) coefficients of correlations with different financial parameters were as follows give in 11 compendium of trendsCoefficient of variation coefficient of correlation exertionCo-efficient of varianceMultipleHighestcorrelation coefficient entropy highest correlativity hugger-mugger heavens banks0.65MCAP/ be sick borderline0.32 past tense 5 year growth0.20 in the public eye(predicate) sector banks0.23P/B mar ge0.76 roe0.69 widely distributed food processing0.71EV/EBITDAhard roe0.80 tax revenue0.64Agri Inputs0.60EV/EBITDA concluding worth0.66 tax revenue0.25 pareve Oil0.88MCAP/PAT receipts0.43 remuneration worth0.38 strain0.37MCAP/PAT dinero worth1.00EBITDA margin0.86Sugar0.44EV/EBITDA net worth0.44 tax revenue0.20Plantations (tea, coffee, flowers)0.59EV/EBITDA receipts0.33Revenue0.29Auto-components0.77EV/EBITDARevenue0.35Revenue0.35*In alimentation oil, lower coefficient was notice in EV/EBITDA. P/E was chosen because EV/EBITDA showed no correlation with any of the parameters studied.Co-efficient of variation was borderline in public sector banks and highest in auto-components. patience multiple of public sector banks, hence, stands as the most genuine industry multiple among the industries discovered. The co-efficient would be high if there is extensive heterogeneity within the industry in terms of size, profitability, product portfolio, impresario background, etc.Earnings b ase multiples EV/EBITDA and P/E showed stripped coefficient of variation in all industries, provided public sector banks, which showed Mcap to halt care for as the most stalls multiple.Considering the correlations observed with the most static multiple, we can opine thatnet margins are the main drivers of multiples in banks (both public and private) among the parameters observed, roe was most important in food processing and commissariat oilplantations and auto-components seem to be operate by revenue vis--vis other parameters observedand agri inputs, rice and scar were influenced by net-worth of respective companies.The following table shows the maximum correlation observed in a peculiar(prenominal) industry. dishearten 12 supreme correlations across industries perseverance level best coefficient of correlationRelationships mystic sector banks0.63 roe and Mcap/ defy prize exoteric sector banks0.81PAT perimeter and Mcap/ take Value world-wide food processing0.90 roe and Mcap/ appropriate ValueAgri Inputs0.71EBITDA margin and Mcap/Sales pareve Oil0.995 year growth and Mcap/SalesRice1.00Net-worth and Mcap/PATSugar0.61ROE and Mcap/ loudness ValuePlantations (tea, coffee, flowers)0.54ROE and Mcap/ deem ValueAuto-components0.47EBITDA margin and Mcap/SalesROE and Mcap/Book Value showed highest correlation in four out of nine industries, followed by EBITDA margin and Mcap/Sales. The results were sort of original a company generating high returns on invested capital (ROE), or a company direct at a higher(prenominal) margin should be wanted more than its peers. display panel 13 Results of general correlation analysis lineMcap/PAT