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Kunj Bansal discusses the re-rating of public sector banks catching up with private banks, mixed retail sector performance, RBI directive benefiting banks, and the importance of fundamentals and valuation for higher returns in the investment.
This week’s Chart of the Week explores the relationship between market cap., liquidity, and valuation. In the current capital-constrained environment, a…
This week’s Chart of the Week explores the relationship between market cap., liquidity, and valuation.
With outperformance by other private and mid-tier PSU banks, the valuation gap between mid-tier and frontline banks has narrowed, Elara Securities said.
Sohini Adnani says: "In an improving economic scenario, the earnings upgrade cycle for midcap stocks is far more robust as their size allows higher percentage growth in revenues and improvement in margins, which leads to superior earnings growth versus largecap companies. This leads to better valuation rerating for midcaps versus largecaps. If you look in absolute terms, even returns in large cap funds are above average during the last year but obviously not as robust as midcaps."