In general, the index fell by 11% in 2025. Since the start of the current year, the decline is about another 8%. This means that the indicator has been declining for three years in a row.
Among the four companies in the index, the distribution is as follows:
- Group LSR -22.7%
- Etalon -29.2%
- PIK -5.9%
- Samolete -5.3%
The criteria for comparative evaluation have not changed. We will consider the following criteria:
- P/E + Future EPS. A company is undervalued if it has a low P/E and a high expected earnings growth per share.
- P/B + ROE. A company is undervalued if it has a low P/B and a high ROE.
- P/S + Net Margin. A company is undervalued if it has a low P/S and a high Net Margin.
- EV/EBITDA + EV/Sales + Operating Margin. A company is undervalued if it has a low EV/EBITDA and EV/Sales, but has a high Operating Margin.
Companies with low multiples but high margins, profitability, or future EPS remain the most attractive.
Total Market Capitalization
As of mid-April, the total market capitalization of the sector was 474.7 billion rubles. The increase was due to PIK shares, which have risen more than 11% since the start of the year and mid-April, significantly helping the index.
The average P/E multiple of the sector is 5.5, compared to 1.6 previously. Note that although prices seem to have fallen, the P/E has increased. This is due to PIK and LSR, whose stock prices are currently rising. In addition, the P/E ratio also includes net profit, which also affects the coefficient.
P/E Multiple
LSR is the best performer. However, this is where the trick of the comparative approach lies. A low P/E, as shown by last year, does not guarantee that the company will be more successful.
For example, the company’s market capitalization fell by more than 20% over the year, while the same indicator for PIK, with a P/E three times higher than LSR, fell by 6% over the year.
P/B + ROE
LSR and PIK lead here as well. LSR has a low P/B multiple, but PIK has a higher ROE. For Samolete, the P/B became negative with the highest ROE in the industry.
P/S + Marginality
LSR’s marginality is 4.3%, compared to 6.4% for PIK. However, LSR’s P/S is slightly lower.
EV/EBITDA + EV/Sales + Operating Marginality
Samolete looks good in terms of operating margin, but the situation is worse with revenue multiples (note from the author: the lower the multiple, the better).
PIK has the lowest operating margin, but its revenue multiples are also lower. LSR is in the middle with relatively low figures but also relatively high operating profit.
Conclusions
The construction sector continues to be risky. The performance of Samolete’s shares over the past year confirmed this.
The sector remains strongly dependent on the key interest rate, which is still high. The situation is somewhat improved by preferential mortgages, but the conditions for them are likely to become stricter. There is not much money around now.
Data on the analysis of most companies using the discounted cash flow method is not yet updated, as it requires detailed financial reporting analysis, which takes time. Data is only available for LSR Group. The model shows that the fair value is near 1315 rubles, which gives a good upside at the current price of slightly above 600 rubles.
FAQ
What factors affect the construction sector on the Moscow Exchange?
The construction sector is influenced by key interest rates, mortgage conditions, and overall economic stability.
Why is the P/E ratio important for evaluating construction companies?
The P/E ratio helps determine whether a company is undervalued or overvalued based on its earnings and market price.
How do market capitalization and multiples impact investment decisions?
Market capitalization and financial multiples provide insights into a company’s valuation and potential for growth, aiding investors in making informed decisions.
