New Delhi, Sep 12
FMCG, IT, auto, oil and gas and consumer durables are among India’s most consistent sectors in providing high-return on equity (ROE) since 2009, a report said on Friday.
A core high-ROE cohort of FMCG, IT, oil and gas, and consumer durables makes up over one third of market cap and earns ROEs about 50 per cent above the rest.
FMCG stocks (under Nifty 50) recorded an average ROE of 35.5 per cent, and since the global financial crisis (GFC) around 2008-2009, the ROE for the sector stood at 45.4 per cent, DSP Mutual Fund said in a report.
IT (28.6 per cent), automobile and auto component (22.8 per cent), oil and gas (22.3 per cent), and financial services (15.9 per cent) were the other top sectors in terms of ROE since the GFC.
This stands as the source of India’s premium valuation over the long term. But since the pandemic (Covid-19), cyclicals such as metals, mining, and construction materials have rerated sharply despite weaker long-term ROEs, the report noted.