Inflation has two impact on the business. First it increases the cost of good sold (COGS) as high inflation increases the value of the following -
1. Row Material
2. Staff cost
4. Financing Cost
First three points are very straight forward, now lets see the fourth point - high inflation create the pressure of the central bank to increase the interest rate to cool the inflation (high interest means people have incentive to put money in the bank in place of spending which cool down the demand side inflation) which increases the cost of financing the business.
Now coming to second, high inflation reduces the the demand of the products in general as central bank is forced to increase the interest rate which control the demand in the economy.
So in short profitability goes down of the companies in general which has impact on the companies valuations.