Bulls & Bear I India Valuation Handbook - Market Makes A Smart Comeback: Motilal Oswal

Motilal Oswal Report

Fundamentally, India is witnessing its own mini-Goldilocks moment with excellent macros (GDP growth of 8.2% in FY24 on the back of ~7% growth in FY23, inflation at ~5%, both current account and fiscal deficits well within tolerance band, stable currency, etc.), robust corporate earnings (Nifty ended FY24 with 25% earnings growth and FY25/26 earnings are likely to post 14-15% CAGR), focus on manufacturing, capex and infrastructure creation, and valuations.

That said, sectors with overheated valuations and recent sharp outperformance, viz. industrials, railways, defense, and PSUs may see more moderation in valuations before they become attractive again from a risk-reward perspective.

Top ideas:

Largecaps – ICICI Bank, ITC, HCL Tech, Coal India, SBI, L&T, M&M, Zomato, Ultratech, Cholamandalam and Hindalco;

Midcaps and Smallcaps – Indian Hotels, Ashok Leyland, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, Senco Gold and Kirloskar Oil.

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