Despite big correction, mid-cap valuations still at premium to large-caps
Live MintSmall- and mid-cap companies often end up at extreme ends of market and economic cycles. In fact, the large-caps’ 12-month trailing valuations are about 17.4 times compared to the Nifty Midcap 100’s price-earnings multiples of 18.7 times, shows Bloomberg data. “If the global market recovers and if India does better as far as the handling of covid-19 cases are concerned, then the probability of foreign investor flows coming back is high. But also note the experience from the global financial crisis of 2008 shows that investors also flock towards market leaders in various industries and sub-sectors, regardless of how large their market capitalization is. The post-GFC recovery provides enough data evidence to support this claim—quality mid & small caps recovered more and faster than large caps during Dec’08-Dec’09,” added the analysts at Edelweiss.