These 15 high-PE stocks make your midcap funds expensive
Companies that have a high growth potential and return on equity command a higher Price-Earning ratio. That isn’t a bad thing, though. High PE might just indicate good future prospects
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.
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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.
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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
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
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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
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
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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
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
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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
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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
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
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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
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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
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
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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
