These 15 high-PE stocks make your midcap funds expensive

The recently concluded Round #2 of mutual fund stress test tells us whether mid-cap and small-cap funds are over-valued or under-valued compared to their benchmark indices. Mutual funds disclosed the price-to-earnings ratio (PE) of their midcap and smallcap scheme portfolios. Ten out of 29 midcap schemes have higher PE ratios than their respective benchmarks. Bandhan Midcap, Baroda BNP Paribas Mid Cap and PGIM India Midcap Opportunities Fund topped the list.

Fund managers and experts say that a scheme’s high PE ratio is not necessarily bad. Vinay Paharia, CIO, PGIM India Mutual Fund says, “Companies which have high growth potential and high potential return on equity command a higher Fair P/E multiple. A stock is considered cheap if its trading at a P/E multiple which is below its Fair P/E and vice versa. Since we invest in high growth and good quality businesses, their fair P/E multiples are also higher”.
Shyam Sekhar, Founder of ithought Financial Consulting explains, “The current high PE ratios reflect excessive inflows also as a contributing factor. It is unlikely these inflows will sustain. In the likelihood of outflows accelerating, you will see the PE ratio go from high to moderate to low. That is how the trajectory usually plays out in the event of growth prospects changing and flows changing in direction”.
Here are the top 15 high PE stocks that are part of the most midcap funds, asper the ACE Equity data. ACE Equity takes into account the consolidated earnings while calculating the Trailing 12 months (TTM PE) of the stocks. It excludes stocks that are recently listed.
Stocks that have TTM PE of above 90 and held by at least five midcap funds are considered for the compilation. TTM PE data as of April 16, 2024. Portfolio data as of March 31, 2024.

Info Edge (India)
TTM PE of the stock (as of April 16, 2024): 307
No. of mid cap schemes hold the stock: 10
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: WOC Mid Cap and Nippon India Growth

Also see: MF stress test, round 2: How did the 10 largest midcap funds do?

Trent
TTM PE of the stock (as of April 16, 2024): 169
No. of mid cap schemes hold the stock: 15
M-Cap type: Large Cap
Sample of mid cap schemes that hold the stock: Invesco India Midcap and Axis Midcap

Devyani International
TTM PE of the stock (as of April 16, 2024): 166
No. of mid cap schemes hold the stock: 7
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: PGIM India Midcap Opp and Nippon India Growth

Voltas
TTM PE of the stock (as of April 16, 2024): 154
No. of mid cap schemes hold the stock: 20
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Motilal Oswal Midcap and Edelweiss Mid Cap

Also see: 10 years of Modi regime: How mutual funds turned into a must-have investment

United Breweries
TTM PE of the stock (as of April 16, 2024): 145
No. of mid cap schemes hold the stock: 8
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: UTI Mid Cap and Franklin India Prima

Linde India
TTM PE of the stock (as of April 16, 2024): 138
No. of mid cap schemes hold the stock: 6
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Quant Mid Cap and Canara Rob Mid Cap

Jubilant FoodWorks
TTM PE of the stock (as of April 16, 2024): 133
No. of mid cap schemes hold the stock: 14
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: SBI Magnum Midcap and UTI Mid Cap

Also see: Sectors that PMS expect big returns from in 2024

Dixon Technologies (India)
TTM PE of the stock (as of April 16, 2024): 128
No. of mid cap schemes hold the stock: 17
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Edelweiss Mid Cap and Invesco India Midcap

Laurus Labs
TTM PE of the stock (as of April 16, 2024): 127
No. of mid cap schemes hold the stock: 5
M-Cap type: Small Cap
Sample of mid cap schemes that hold the stock: Mirae Asset Midcap and PGIM India Midcap Opp

Kaynes Technology India
TTM PE of the stock (as of April 16, 2024): 110
No. of mid cap schemes hold the stock: 5
M-Cap type: Small Cap
Sample of mid cap schemes that hold the stock: Invesco India Midcap and Mahindra Manulife Mid Cap

Also see: 10 mid-cap gems that children-oriented MFs love to hold for the long term

Godrej Properties
TTM PE of the stock (as of April 16, 2024): 109
No. of mid cap schemes hold the stock: 7
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: HSBC Midcap and ICICI Pru Midcap

Solar Industries India
TTM PE of the stock (as of April 16, 2024): 95
No. of mid cap schemes hold the stock: 9
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Kotak Emerging Equity and ITI Mid Cap

Astral
TTM PE of the stock (as of April 16, 2024): 94
No. of mid cap schemes hold the stock: 14
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Bandhan Midcap and Axis Midcap

Also see: MF stress test: Check whether your smallcap fund has these illiquid stocks

Thermax
TTM PE of the stock (as of April 16, 2024): 91
No. of mid cap schemes hold the stock: 13
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: SBI Magnum Midcap and Tata Mid Cap Growth

Metro Brands
TTM PE of the stock (as of April 16, 2024): 90
No. of mid cap schemes hold the stock: 9
M-Cap type: Mid Cap
Sample of mid cap schemes that hold the stock: Baroda BNP Paribas Mid Cap and Bandhan Midcap

Also see: Silver lining from marooned markets: Midcap stocks that turned the latest MF favourites