Valuation fears hit defence stocks: Where are they headed? Here’s what OmniScience Capital says

The Nifty India Defence Index had surged 42.2% in the past three months, far outpacing the Nifty’s 13.2% gain. The strong momentum revived concerns over high price-to-earnings multiples, with some stocks trading at nearly 60 times earnings — well above their historical averages.

“The correction was due to overvaluation in the defence stocks as the sector is trading at around 60 times price to earnings, which is significantly higher than the historical average,” said Ashwini Shami, EVP and portfolio manager at OmniScience Capital. “The growth in the defence companies is already priced in the stocks; so unless the companies continue to deliver 18–20% growth, sharp declines are likely.”

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https://timesofindia.indiatimes.com/business/india-business/valuation-fears-hit-defence-stocks-where-are-they-headed-heres-what-analysts-say/articleshow/122392407.cms