Standalone PE: This is calculated using the financials of only the parent company, excluding the performance of its subsidiaries, joint ventures, or global entities. It reflects how the core standalone business is performing.

Consolidated PE: This includes the combined financials of the parent company and all its subsidiaries (both domestic and international). It reflects the overall profitability and valuation of the entire business group.

From a research and valuation perspective, consolidated PE is generally the right metric to use, especially for companies with a significant number of subsidiaries or global operations.

For example, in the case of Deepak Nitrite Ltd., a large portion of its revenue and profits comes from international markets through its subsidiaries.

Using standalone PE here would overlook a major part of the business, potentially leading to incorrect conclusions about the stock’s valuation.

Consolidated PE provides the most accurate and complete picture of a company’s earnings potential.