Investable value stock universe is shrinking: ICICI Securities

Mumbai: ICICI Securities said the population of ‘investable value stocks’ has diminished following the recent rally in the broader market. The brokerage said the number of stocks with trailing RoE (Return on Equity) above 14% and whose earnings yield are above bond yield, has dropped from 171 to 104 within the universe of the top-1,000 stocks by market capitalisation.

The proportion of ‘investable value stocks’ has dropped sharply from 17% at the beginning of the year to 10%, according to ICICI Securities. Most of the stocks that fulfil the criteria are stocks in financials, ‘fossil fuel energy’ and other materials.

The brokerage said value stocks have been outperforming since FY21. Value stocks are expected to keep outperforming till investment, commodity and credit cycle remain strong, it said.