There was a decline in midcap and smallcap premium compared to Sensex

Ahmedabad: The valuation premium of BSE Small and Midcap indices compared to BSE Sensex is the lowest in the last one year. The fall in share prices amid the recent decline in small and midcap indices has impacted the premium.

BSE Midcap Index is currently trading at a trailing price-to-earnings multiple of 26.2t, while BSE Smallcap is trading at a PE of 29t. In comparison, the large cap Sensex is trading at a PE multiple of 25 times.

In March this year, the midcap index has declined by 4.5 percent and the smallcap index has declined by about 10 percent. In comparison, the Sensex has gained 0.4 percent so far this month.

In March last year, midcap and smallcap indices were trading at slightly lower valuations than the Sensex. BSE Midcap was trading at around 12.9 times its earnings per share in March last year, while Smallcap was trading at 22.1 times.

Short-term data shows that mid- and small-cap stocks have traded at higher valuations than the benchmark indices on most occasions. Since April 2015 when BSE started publishing valuation ratios for the index, the average PE multiple of the BSE index is 28 times. PE of small cap during the same period was 42.6 times.