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Midcap IT trading at high valuation; underweight on FMCG sector: Motilal Oswal AMC

Updated : June 04, 2021 12:51:42 IST

Manish Sonthalia, head equities-PMS at Motilal Oswal AMC, on Friday, said that midcap IT companies are trading at high valuations.

In an interview with CNBC-TV18, he said, “The story is good for all the midcap IT names; it’s just the valuation at which one wants to buy. One can argue that these are mid-cycle valuations, so valuations may look elevated. So, names like Birlasoft, Coforge of the world are trading at north of 40 times price to earnings multiples.”

“However, I would be more comfortable with the largecap names even if they are at a higher valuation, because if going is very good for a particular sector then large companies are going to get disproportionate benefits as opposed to the midcaps,” said Sonthalia.

However, Sonthalia is underweight on highly valued fast-moving consumer goods (FMCG) stocks. “On higher PE valuation, I am underweight on the FMCG space because I don’t think growth is going to be fascinating for us to justify the valuation and that’s why we have an underweight position,” he said.

For the entire interview, watch the video.
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