Number of investable value stocks falls in 2023, says ICICI Securities
Investable value stocks: ICICI Securities said the number of stocks with the minimum quality attribute have fallen to 104 from 171 within the universe of the top-1,000 stocks.
- Sep 4, 2023,
- Updated Sep 4, 2023 12:33 PM IST
The proportion of investable value stocks among the top 1,000 listed companies by market capitalisation (m-cap) has fallen to 10 per cent now against 17 per cent at the start of 2023, ICICI Securities said in a strategy note. At present, the bulk of stocks that fulfil the criteria are largely related to financials, ‘fossil fuel energy’ and other materials, the brokerage said.
ICICI Securities said the number of stocks with the minimum quality attribute of trailing return on equity (RoE) of over 14 per cent and earnings yield greater than bond yield, have fallen to 104 from 171 within the universe of the top-1,000 stocks. Out of 104 companies, 73 per cent have private ownership while 27 per cent have government ownership, it said.
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ICICI Securities said its analysis indicated that the value factor started to outperform since FY21. It attributed the outperformance of the value factor to macro demand in the economy, which is largely emanating from sectors related to the investment cycle that includes the capital intensive sectors related to fossil fuel energy, other materials, apart from engineering and capital goods.
It also cited sectors credit cycle accompanied by bottom formation in the NPA cycle; and buoyant demand and emerging price stability in commodities.
"Stocks related to the aforementioned sectors are typically capital- intensive, cyclical and value stocks. Our back-testing indicates that as long as the investment, commodity and credit cycle continue to be robust, value stocks will have the necessary catalysts to keep outperforming. Pockets of discretionary consumption are also showing robust demand, but they typically fall under growth stocks," it said.
Disclaimer: Under no circumstances should any person at this platform make trading decisions based solely on the information discussed herein. You should consult a qualified broker or other financial advisor prior to making any actual investment or trading decisions. All information is for educational and informational use only. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.
Also read: Hot stocks on September 4, 2023: YES Bank, Tata Steel, Jio Financial, RVNL and more
The proportion of investable value stocks among the top 1,000 listed companies by market capitalisation (m-cap) has fallen to 10 per cent now against 17 per cent at the start of 2023, ICICI Securities said in a strategy note. At present, the bulk of stocks that fulfil the criteria are largely related to financials, ‘fossil fuel energy’ and other materials, the brokerage said.
ICICI Securities said the number of stocks with the minimum quality attribute of trailing return on equity (RoE) of over 14 per cent and earnings yield greater than bond yield, have fallen to 104 from 171 within the universe of the top-1,000 stocks. Out of 104 companies, 73 per cent have private ownership while 27 per cent have government ownership, it said.
TABLE
ICICI Securities said its analysis indicated that the value factor started to outperform since FY21. It attributed the outperformance of the value factor to macro demand in the economy, which is largely emanating from sectors related to the investment cycle that includes the capital intensive sectors related to fossil fuel energy, other materials, apart from engineering and capital goods.
It also cited sectors credit cycle accompanied by bottom formation in the NPA cycle; and buoyant demand and emerging price stability in commodities.
"Stocks related to the aforementioned sectors are typically capital- intensive, cyclical and value stocks. Our back-testing indicates that as long as the investment, commodity and credit cycle continue to be robust, value stocks will have the necessary catalysts to keep outperforming. Pockets of discretionary consumption are also showing robust demand, but they typically fall under growth stocks," it said.
Disclaimer: Under no circumstances should any person at this platform make trading decisions based solely on the information discussed herein. You should consult a qualified broker or other financial advisor prior to making any actual investment or trading decisions. All information is for educational and informational use only. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.
Also read: Hot stocks on September 4, 2023: YES Bank, Tata Steel, Jio Financial, RVNL and more