defensive stocks: Defensive no more? 40 defensive stocks trading above 5-yr average P/E

Despite facing volatility in the last year, Indian equities have seen a correction of about 10% from their all-time highs. However, an analysis by ETMarkets revealed that several stocks are still trading above their average 5-year price-to-earnings multiple.

According to data from Ace Equity, out of the 145 companies in the BSE 500 index, approximately 40 companies belong to defensive sectors such as healthcare, IT, and FMCG, and are trading higher than their average valuation.

When considering the value of a company, analysts often use parameters like price-to-earnings (P/E) ratio for comparison. However, it is important for investors to also consider factors like the company’s fundamentals, earnings growth trend, and risk factors before making investment decisions.

In the healthcare sector, 19 companies are trading above their 5-year average P/E, including Sun Pharmaceutical Industries, Aurobindo Pharma, and Biocon. Similarly, companies in sectors like automobile and auto ancillaries, chemicals, and information technology are also trading above their average valuations.

Given the recent correction in equities, some high-value stocks are still trading at premium valuations, particularly in the technology sector. Analysts are cautious about the IT sector due to risks to earnings amid a slowdown in the US and Europe, while they believe that pharma stocks may perform better due to relatively cheaper valuations.

Market experts are optimistic about the auto ancillary space, citing strong demand in the domestic market and growth in the electric vehicle sector. Stocks like Minda Corp and Uno Minda are favored in the auto ancillary pack for their resilience in the volatile market.

Overall, it is important for investors to conduct thorough research and consider various factors before making investment decisions.