Even as blue chip stocks such as Page Industries and Bajaj Finance continue to soar in the recent times, with their PE ratios going through the roof, Manish Sonthalia of Motilal Oswal says that these names may see a time correction.
Even as blue chip stocks such as Page Industries, Kotak Mahindra Bank and Bajaj Finance continue to soar in the recent times, with their PE ratios going through the roof, Manish Sonthalia of Motilal Oswal says that these names may see a time correction. Notably, shares of Page Industries closed at near 52-week high levels at Rs 34,600 on Friday.
Bengaluru-based Page Industries is the exclusive licensee of Jockey International Inc (USA) for manufacture, distribution and marketing of the Jockey brand in countries including India, Sri Lanka, Bangladesh, Nepal and the UAE. The firm recently made news after the rally in share prices caused its PE to move beyond the 100-mark.
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Sharing his insights on names such as Page Industries, Kotak Mahindra Bank and Bajaj Finance, Manish Sonthalia noted that the shares have run-up a lot in the recent times. “They have run up so much there can be time correction. But a lot of growth is left in many of these names even now. It is easier said than done that you flip these stocks because they are more than fully priced for the near term and then to buy back again when growth comes back,” Manish Sonthalia, Chief Investment Officer and the Director of the India Zen Fund, Motilal Oswal AM-PMS, told in an interview to ET Now.
Interestingly, in a recent interview, Porinju Veliyath said that it doesn’t make sense to pick these names at such a high valuation. “I don’t agree with the view that you buy only top quality companies at 70-100 PE. It’s a cycle. The companies which under-performed in the last 5 years are doing well in the last six months. Buying Britannia, Page, etc at 70-100 PEs is equivalent to picking up midcaps in November-17,” Porinju Veliyath told ET Now, adding that it’s the right to pick medium quality companies with relevant business model.