Quality largecap stocks could be better bets as risk loses its lure

ET Intelligence Group: For retail investors seeking to navigate the choppy waters, largesized companies appear to be better bets now as appetite for risk assets diminishes in India.

Besides having relatively cheaper valuations compared to smaller peers, large-sized companies continue to record double-digit growth in earnings and revenues in the December 2017 quarter, given established business models and greater resilience against business cycles.

The BSE 100’s past three-year average price to earnings multiple is 22.2 and its current price to earnings multiple is 23.7, which is at a premium of 6.8 per cent. On the other hand, BSE Midcap’s past three-year average price to earnings multiple is 29.5 while its current price to earnings multiple is 38.7, a premium of 31 per cent.


Investors could look at large-sized companies that represent a combination of rural, defensive and infrastructure themes, which are less likely to see sharp corrections in their share prices because of greater visibility on earnings.

ETIG lists prominent names that represent the aforementioned themes: Dabur, Hero Motocorp, Mahindra & Mahindra, TCS, NTPC, Bharti Infratel, TCS, NTPC, Pidilite, Colgate Palmolive, ITC, and UltraTech Cement.