After hitting a low of 21,744 in April, the benchmark Nifty50 has rebounded nearly 15%, pushing its valuation back above 20 times its 12-month forward earnings. The gains in the Nifty Midcap gauge have been even more pronounced.
According to Jefferies, the recent rebound in broader markets has pushed up valuations, prompting many companies to resume share sales to capitalize on investor optimism.
“The rally in the market means that valuations have become an issue again, most particularly in the mid-cap space,” Christopher Wood wrote in a note dated June 19.
The market rebound has been broad-based, with both large- and mid-cap segments participating in the rally. While the Nifty50 has gained 15% from its April lows, its broader counterpart, the Nifty Midcap Index, surged close to 24%, pushing its valuation to 27 times its 12-month forward earnings.
“This is also why corporates are again placing equity to take advantage of such valuations,” the note added.
One of the largest transactions in recent months was executed by Pastel Ltd, a subsidiary of Singapore-based telecom conglomerate Singtel, which sold over 7 crore shares in Bharti Airtel, totalling $1.5 billion. The shares were offloaded at an average price of ₹1,814.08 apiece on the NSE.
In the same month, British American Tobacco (BAT), the largest shareholder in ITC, raised a comparable amount by selling a 2.5% stake in the company. More recently, in June, Samayat Services—the promoter entity of Vishal Mega Mart and backed by Partners Group and Kedaara Capital—sold a 20% stake via a block deal, raising $1.2 billion.
The existing equity holders, including the promoter and investors, offloaded shares worth $7.2 billion in May this year and have raised another $6 billion so far in June. It is this supply that poses the main risk to the market and the same was running at around $7 billion a month before the correction, which began in late September last year.
ALSO READ | Block deals surge to nearly $20 billion in first half of 2025
(Edited by : Ajay Vaishnav)
