With a price-to-earnings (or “P/E”) ratio of 32.3x EIH Limited (NSE:EIHOTEL) may be sending bearish signals at the moment, given that almost half of all companies in India have P/E ratios under 26x and even P/E’s lower than 15x are not unusual. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the elevated P/E.

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With earnings growth that’s exceedingly strong of late, EIH has been doing very well. The P/E is probably high because investors think this strong earnings growth will be enough to outperform the broader market in the near future. You’d really hope so, otherwise…