Last Updated:June 18, 2025, 14:36 IST
Sujith draws a parallel between buying a flat and buying a stock. He says valuation matters a lot – be it flat, property or stock.
Stock Valuation.
A recent LinkedIn post by Sujith S S, Founder of MoneyDhan.com and a SEBI-registered investment advisor, has sparked conversation among investors by simplifying the concept of stock valuations using a relatable real estate analogy. The post has gone viral, attracting praise for its clarity and criticism for oversimplification.
Sujith draws a parallel between buying a flat and buying a stock. He asks readers to imagine a property that earns Rs. 10 lakh annually and is being sold for Rs. 4.80 crore—giving it a Price-to-Earnings (P/E) ratio of 48. At this rate, it would take 48 years to recover the cost through rental income, assuming no increase in earnings. “Sounds absurd, right?” Sujith writes, adding that most would value such a flat closer to Rs. 2 crore (P/E of 20), expecting rental income to grow over time.
The P/E ratio or Price-to-Earnings ratio is a common way to measure how expensive or cheap a stock is, based on its earnings.
He then compares this logic to buying a stock priced at Rs. 480 with annual earnings of Rs. 10 per share, also giving a P/E of 48. Unless the company doubles its earnings soon, the investor could be stuck in a long wait for returns.
Sujith says valuation matters a lot – be it flat, property or stock.
While many users praised the post as “insightful” and “beautifully explained,” others challenged the comparison. “You buy flats to live in, not just for income,” one user noted. Another added, “Equity investments include potential capital appreciation, not just earnings.”
Despite criticisms, Sujith’s post has succeeded in bringing the valuation conversation into simpler, more relatable terms—reminding retail investors that price matters, whether in property or in shares. As one commenter put it, “P/E is a compass, not a guarantee. Growth must be probable, not just possible.”
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
- First Published:
#Pay #Lakh #Rent #Expert #Explains #Stock #Valuation #Savings #Investments #News
