Mumbai: ICICI Securities said the market-cap share of defensive sectors such as FMCG, IT and healthcare has retreated to around 20%-its lowest level since 2011-from its peak of 30% in 2020.
The brokerage said that defensives' profit pool share has fallen to 16% from about 40% in FY21 and is headed towards its historical cycle low of 14% over the next two years, while valuations remain elevated relative to the broader market.
ICICI Securities said the trailing P/E of defensives is currently around 32 times, well above the 25 times of the market, and remains some distance away from its historical cycle lows.
Within defensives, FMCG, healthcare and IT trade at PE ratios of 42 times, 39 times and 24 times, respectively, according to the study
"IT has moderated the most, with its market cap share dropping below its profit share for the first time since FY13," the note said. "Beyond the normal cyclical underperformance, de-globalisation and inward-looking policies are now additional hoops that IT and pharma have to jump through."
ICICI Securities said the trailing P/B or Price to Book (PB) ratio of cyclicals including discretionary consumption and industrials stood at 5.9 times and 5.4 times, respectively, up from their 2020 bottom of 2.6 times and 1.5 times.
The brokerage said that defensives' profit pool share has fallen to 16% from about 40% in FY21 and is headed towards its historical cycle low of 14% over the next two years, while valuations remain elevated relative to the broader market.
ICICI Securities said the trailing P/E of defensives is currently around 32 times, well above the 25 times of the market, and remains some distance away from its historical cycle lows.
Within defensives, FMCG, healthcare and IT trade at PE ratios of 42 times, 39 times and 24 times, respectively, according to the study
"IT has moderated the most, with its market cap share dropping below its profit share for the first time since FY13," the note said. "Beyond the normal cyclical underperformance, de-globalisation and inward-looking policies are now additional hoops that IT and pharma have to jump through."
ICICI Securities said the trailing P/B or Price to Book (PB) ratio of cyclicals including discretionary consumption and industrials stood at 5.9 times and 5.4 times, respectively, up from their 2020 bottom of 2.6 times and 1.5 times.
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