Synopsis
A recent report highlights the increasing attractiveness of high-growth stocks for investors amidst ongoing market corrections and consolidations, with expectations for a turnaround by FY26.Key Takeaways
- High-growth sectors are more appealing during market corrections.
- Turnaround expected by the second half of FY26.
- Stocks with over 25% YoY growth are trading at 15-20 times forward multiples.
- Discretionary consumption and renewables show strong investment potential.
- Strategic investors will benefit from emphasizing earnings clarity.
Mumbai, March 13 (NationPress) - High-growth stocks are increasingly appealing to investors as the market navigates through a period of correction and consolidation, according to a recent report released on Thursday.
The current market correction is anticipated to persist for the next two quarters, driven by capital outflows and a lack of significant new reforms.
Financial services firm Caprize Investment predicts a turnaround may occur in the latter half of FY26, paving the way for a cycle of earnings re-rating.
Caprize Investment asserts that sectors exhibiting high growth and robust earnings visibility will begin to stabilize as market expectations adjust toward FY27, following the release of Q1 FY26 results.
Numerous stocks showcasing over 25 percent year-on-year (YoY) growth are presently trading at forward multiples ranging from 15 to 20 times.
As the market continues to consolidate, these valuations are expected to become increasingly enticing as investors start factoring in future earnings potential, the report highlighted.
A significant liquidity event is regarded as a crucial element for market recovery. While liquidity has been plentiful in recent years, the upcoming quarters may pose challenges in this regard.
In spite of this, various high-growth sectors are forecasted to present robust investment opportunities, including discretionary consumption, power, manufacturing, renewables, data centers, and water treatment.
Specifically, discretionary consumption is a focal point, with promising prospects for value retail, jewelry manufacturers, and mid-to-premium hotel chains.
The power sector is gaining traction, particularly in transformers and transmission EPC projects.
“While short-term volatility may persist amidst liquidity pressures and earnings normalization, sectors such as discretionary consumption, renewables, and niche manufacturing exhibit strong long-term potential,” stated Piyush Mehta of Caprize Investment.
He further mentioned that strategic investors who emphasize earnings clarity and valuation discipline will be well-prepared to navigate this dynamic environment.
Moreover, the Make in India initiative is anticipated to provide enduring support to the manufacturing sector.
Renewables and data centers are also expected to experience sustained growth, fueled by the rising demand for digital infrastructure and a shift towards sustainability.
