Nearly half of the Nifty50 Index constituents are trading below their long-term valuation multiples and about two-thirds of Nifty50 sectors trade at a discount to historical averages, The Economic Times reported.
At the end of June, Nifty50 traded at a 12-month forward P/E of 17.6 times, which was at a 9 per cent discount to its long-term average. On a trailing basis, Nifty50 at 20.7 times traded at a 3 per cent discount to its LPA of 21.2 times.
Motilal Oswal said in a note, "The adverse macro backdrop, with heightened worries about rising interest rates, elevated crude oil prices, and liquidity tightening, has kept the market volatile and jittery." After the correction, the Nifty50 trades at 18.4 times FY23E, below its 10-year average P/E of 19.5 times. We find more value in large-caps than in midcaps, given the relative valuation equation. "
ONGC traded at a 78 per cent discount to its 10-year average of 8.5 times, with a PE multiple of 1.9 times. Tata Steel traded at a 53% discount to its historical PE of 12.5 times at 5.9 times. Coal India (down 53 per cent), Apollo Hospitals (down 38 per cent) and JSW Steel (down 36 per cent) are a few other stocks which are trading at steep discounts to their historical levels.
There are other stocks, such as Reliance Industries (up 47 per cent), Britannia Industries (up 30 per cent), Infosys (up 26 per cent), HCL Technologies (up 22 per cent) and Tata Consultancy Services (up 22 per cent), which are trading at steep premiums to their historical averages.
Sector-wise, the auto sector PE of 23 times is at an 8 per cent discount to its historical average of 25 times. The metals sector is trading at an EV/Ebitda ratio of 4.6 times, which is quite below its 10-year historical average of 6.6 times. Despite the recent correction, the technology sector is trading at a P/E of 22.2, a 19% premium to its historical average of 18.6.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
