Why Every Sector Has Its Own Dashboard

intermediate6 min read

P/E works for FMCG and lies for banks. The first skill of sector analysis is knowing which numbers matter where.

A generic ratio screen treats an HDFC Bank, an Infosys and a Hindustan Unilever as the same animal — and misprices all three. Each sector has a business physics of its own: banks make money on spreads, IT on billed hours, pharma on regulatory approvals, autos on monthly volumes, FMCG on shelf velocity. Sector analysis starts by swapping the generic dashboard for the native one.

The deepest version of this mistake is valuing every sector on P/E. A bank’s “earnings” sit on top of a loan book whose true quality is only revealed across a credit cycle — so banks are valued on price-to-book adjusted for bad loans, not P/E. A cyclical auto stock looks CHEAPEST on P/E at the top of its cycle (peak earnings) and most expensive at the bottom — exactly backwards. An FMCG compounder’s P/E is high for structural reasons a screen calls “expensive”. Rule one of the playbooks: *learn which valuation lens each sector uses before comparing anything*.

Banks/NBFCs — spread businesses: NIM, asset quality (GNPA/NNPA), CASA, credit growth; valued on P/B and ROA.
IT services — people businesses: constant-currency growth, EBIT margin, attrition, deal wins (TCV); valued on P/E with growth.
Pharma — regulatory businesses: US generics pricing, ANDA pipeline, USFDA inspection status, R&D spend.
Autos — monthly-cycle businesses: volumes, realisations, dealer inventory; cyclical P/E trap applies.
FMCG — distribution businesses: volume vs price-led growth, gross margins vs ad spend, rural/urban mix.

Test yourselfA screener shows an auto stock at 8× P/E (cheapest in 5 years) after two record sales years. Bargain?

Probably the opposite — the cyclical P/E trap. Peak-cycle earnings inflate the E, making P/E look cheapest exactly at the top. Cyclicals demand volume-cycle and mid-cycle-earnings thinking, not point-in-time P/E ranking.

✓ You learnedEvery sector has native metrics and a native valuation lens — banks on book value and asset quality, IT on margins and deal flow, pharma on approvals, autos on the volume cycle, FMCG on volumes and distribution. The playbooks that follow give you each dashboard; never grade a sector with another sector’s scorecard.

FAQs

Where do I find these sector metrics?

Almost all are in quarterly investor presentations (the cleanest source — companies present their own sector dashboard), earnings-call transcripts, and for system-level data: RBI publications for banking, SIAM for auto volumes, USFDA databases for pharma inspections. Screeners carry the generic ratios; the sector numbers usually need the primary documents.