Robust earnings forecast on mid, small-cap stocks
The mid-cap and small-cap segments, which have largely outperformed the large-cap space amid the pandemic are likely to witness robust earnings during the period of FY21-23.
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Mumbai: The mid-cap and small-cap segments, which have largely outperformed the large-cap space amid the pandemic are likely to witness robust earnings during the period of FY21-23.
"Given the significant loss pools in the small and mid-cap indices, earnings growth expectations are over FY21-23 are steep and not comparable to the Nifty-50 growth," said an ICICI Securities report. However, removing the loss to profit companies the growth expectations of mid and small-caps appear stronger than Nifty-50 especially in FY23, it added.
The broader markets, especially in the small-cap space 'margin of safety' in terms of valuation discount had improved considerably by the end of CY19 and remained so as of September 2020. "Since then small and mid-caps have significantly outperformed the Nifty-50 despite the economy going through a technical recession thereby, fuelling fears with regards to their valuation discount to largecaps," the report said.
