Limited room for growth of SMIDs

Soaring Valuations

•  Nifty Mid-cap Index P/E at 24.2x is almost at its 2017 peak at 24.5x
•  Nifty Small-cap Index P/E at 21.6x

New Delhi: The continued rally of the past three months has pushed the small-and mid-caps (SMIDs) five-year outperformance ahead of the 10-year outperformance, thereby closing the gap, Elara Securities said in a report. Hence, the room for further catchup outperformance is limited, in our view.

The Nifty Midcap Index P/E at 24.2x is almost at its 2017 peak at 24.5x. The Nifty Smallcap Index P/E at 21.6x has crossed the previous peaks in 2015 at 17.6x and 2017 at 18.3x.