Companies like Dixon Technologies, Zomato, which posted very robust Q3 earnings, are saddled with “transformative” multiples, according to Prasad.
“The multiples of the names you mentioned, like Zomato, Dixon and others, are very innovative and they all deserve perfection and have met with disappointment and stocks have been hammered quite significantly,” he said. Said.
Speaking about large consumer stocks, Prasad said the valuations of these companies are as high as pre-pandemic levels, but their volumes have declined.
“Right now, you’re currently seeing volume growth pretty slim across most parts of the consumption space, low single digits for most statement names,” he said.
Intensity of competition is growing in this sector as well, affecting all companies by hampering their profitability, Kotak Institutional Equities MD stressed.
“If you look at the structural issues that are coming up across the consumption space, we are starting to see more competition within every category of the broader consumption space,” Prasad said.
“So, in the context of the fact that incremental volumes could possibly reach more players, profitability, which was a higher aspect, logically comes down given more competition. “Sho,” he added.
