The brokerage said that the profit pool of defensives has fallen to 16% of around 40% in FY21 and is on the way to the historical cycle of 14% in the next two years, while the valuations will continue to be increased compared to the wider market.
Icici Securities said that the rear p/e of Defensives is currently approximately 32 times, well above 25 times of the market, and remains at some distance from his historical cycle lows.
Within Defensives, FMCG, Healthcare and IT with PE relationships from 42 times, 39 times and 24 times, according to the study
“It is the most moderated, with its market capital share that is falling under its profit share for the first time since FY13,” said the note. “In addition to the normal cyclical underperformance, de-globalization and inside-looking policy are now extra hoops that have to jump through and pharma.”
Icici Securities said that the backlog of P/B or price/PB) ratio of cyclical substances including discretionary consumption and industry was 5.9 times and 5.4 times respectively, higher than their 2020 bottom of 2.6 times and 1.5 times.
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