These Are India’s Most Expensive Large-Cap Stocks

Consumer goods, considered a defensive investment in times of volatility, is the most expensive sector for investors as India’s benchmark indices scale new peaks riding on select stocks.

Broader markets remain tepid with only 17 of the 228 companies with a market valuation of at least Rs 10,000 crore trading at 52-week highs as of Aug. 21. That pushed up their price-to-earnings multiple, making them costlier for investors.

Here’s a snapshot of India’s most-expensive indices and stocks…

FMCG

Nearly 50 percent or eight of the 17 stocks on this list belong to the fast-moving consumer goods basket. The Nifty FMCG Index rallied more than 20 percent so far this year. That was led by Britannia Industries Ltd., Dabur, Godrej Consumer Products Ltd. and ITC Ltd., among others, which gained between 20 percent and 40 percent in the same period.

At nearly 67 times its FY19 estimated price-to-earnings multiple, Britannia is the most expensive stock in this segment. The stock trades at a 36 percent premium to its five-year average P/E.

Information Technology

IT stocks have the second-largest share with L&T Infotech being the most expensive.

Brokerage firm Emkay said strong growth across key verticals, large deal wins, and healthy margin expansion have helped L&T Infotech, which offered more than 150 per cent return in the last one year.

Analysts expect profitability for Info Edge and Infibeam to improve with the latter’s price 22 percent below the Bloomberg consensus target.

Pharmaceuticals

Divi’s Laboratories Ltd. trades at 30 times its estimated price-to-earnings for FY19 and is 11 percent cheaper to its five-year average.

Sun Pharmaceutical Industries Ltd., the country’s largest drugmaker by market capitalisation, is also available at a discount.

Financials

Axis Bank and RBL Bank Ltd., which have gained more than 20 per cent in the last six months, remain relatively inexpensive.

Other Outperformers

The rally in Reliance Industries Ltd., which became the only second company to breach the $100-billion market capitalisation mark, was led by its telecom arm Reliance Jio Infocomm Ltd. and sustained growth momentum in its core refining and petrochemicals business. But the stock is the most expensive trading at 17.5 times its FY19 estimated P/E.

After giving negative returns in the last three years, Batterymaker Amara Raja Batteries has rallied close to 10 per cent since July 2018 to hit a fresh 52-week high on Tuesday.