Aswath Damodaran says India’s market is most expensive: ‘Can’t justify paying 31x earnings’

India has been one of the worst-performing markets in 2025 but valuations guru Aswath Damodaran believes Indian stocks are still the most-expensive despite being in one of the fastest growing economies in the world. In fact, Chinese Shanghai have done better than India’s benchmark index, Sensex, this year so far.

“The most expensive market in the world is India, and no amount of handwaving about the India story can justify paying 31 times earnings, 3 times revenue, and 20 times EBITDA, in the aggregate, for Indian companies,” Damodaran wrote in a blog post recently. Despite being relatively fast-growing economy, its current valuations are far above those of most other markets globally, according to him. EBITDA is a measure of a company’s profitability and it expands into earnings before interest, tax, depreciation and amortisation.

When comparing India to other regions, Damodaran notes that some of the cheapest markets, such as Latin America and Eastern Europe, come with their own set of risks, including political instability and low growth. In contrast, Japan, which is often seen as a low-growth market, faces additional challenges due to its aging population. And his thesis is visible in the returns from the blue-chip stocks in different countries this year so far.

Benchmark indices in Argentina, Brazil, and Chile have far outpaced their peers in other countries.

Also Read: Stocks to watch on Feb 10: Hitachi Energy India, BEL, Vedanta, Oil India, Va Tech Wabag and moreDamodaran highlights that while India’s price-to-earnings (P/E) ratios are high, there are other regions where investors are paying lower multiples.

The caution about expensive valuations extends beyond just India. According to the Professor of Finance at the Stern School of Business at New York University, some markets, particularly in the Middle East, may appear expensive due to quirks in market composition, such as a higher presence of financial service firms, which often report no revenues.

Meanwhile, some regions, such as Japan and South Korea, appear undervalued in terms of enterprise value-to-sales metrics, even though they are not immune to broader economic challenges.