Quality stocks seem resilient around broader market bends. Hence, when the market tanked last year, investors holding on to them did not face a drastic fall. However, of late, the P/E multiple of the Quality Index has not been in sync with the broader index. Some quality stocks are going through a time correction.
In October 2019, Sunil Singhania, founder of Abakkus, an asset-management company, released a report called The Big Call – Bubble in Quality? According to the study, conducted on 27 high-quality P/E (price to earnings) and prominent companies in India, a majority have not delivered valuation-justifying performance. Most of them had grown below GDP and would need to trade at 50x-75x P/E in FY28 for mere 12% annual growth in the next nine years.
Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors
Stock analysis. Market Research. Industry Trends on 4000+ Stocks
Clean experience with
Comment & Engage with ET Prime community
Exclusive invites to Virtual Events with Industry Leaders
A trusted team of Journalists & Analysts who can best filter signal from noise