Some more pain left in mid and smallcap companies; largecap valuations attractive: Sampath Reddy
Sampath Reddy, Founder & CIO, Azurean Investment Managers, says mid and smallcap banks or NBFCs or some of the affordable housing lenders may have the potential for much bigger returns, but the risks are also higher there. Within the overall lending space, he would prefer to stick to the larger private sector banks compared to NBFCs and other lenders.
What is your reading of the market? Do you think much of the global and domestic parameters are in the price or could there be some more downticks in the days to come?
Sampath Reddy: It is a little difficult to say how the excess valuation that is there in the mid and smallcap segments will be readjusted. Even with the yesterday's fall or last few days' fall, mid and smallcap companies, broader valuations of that segment as such still on the higher side, whether it will be a prolonged time correction or an accelerated growth in earnings, which way it will bring the overall multiples of the mid and smallcap segments is difficult to say but at this point of time with whatever the correction that we have seen so far, largecap segment looks very-very attractive.
The valuations of most of the largecap segments are quite attractive. And within that, banking as such is looking much more attractive sector-wise. So, I do not think mid and smallcap sectors, the worst is over. I do not think the valuations have come to a very attractive level there. They are still elevated as compared to its own historical valuations and also, even otherwise, to get paid about 12-13% kind of an
