Bluechip valuation slump offers value bets amid weak investor sentiment

The BSE Sensex has fallen 6.8% since the end of September 2025, with its trailing P/E multiple down 10.8%

Indian equity markets are not only underperforming peers in other developed and emerging markets, but also being de-rated by investors. This shows a steady decline in the valuation ratios of the benchmark indices and top stocks. In the past 12 months, the BSE Sensex has fallen 6.8 per cent from 80,268 at the end of September 2025 to 74,782 on Friday. In the same period, the index’s trailing price to earnings (P/E) multiple is down 10.8 per cent from 22.2x to 19.8x. Similarly, the index price to book value ratio (p/bv)has declined 6.1 per cent in the past one year, from 4.28 to 4.02.

 

The Sensex’s current earnings multiple is close to its lowest since June 2020, while the price to book value is the lowest since April 2025, barring March 2026 when the ratio had declined to 3.78. This low valuation simply reflects the valuation de-rating of the country’s top listed companies that are part of the index. 

A sharper decline in the valuation ratio suggests that investors are pessimistic about the prospects of faster earnings growth in the country, especially for the largecap stocks, and they see a slowdown in the pace of growth from their current level. It could also mean that foreign portfolio investors (FPIs) — who are largely responsible for the decline in share prices of large cap stocks and benchmark indices — see better growth prospects in other markets. 

While low valuations clearly hint at poor investor sentiment, it also offers a buying opportunity for value investors. On many occasions in the past, such as in 2011, 2016 and 2020, the market has bounced back from a similar level of valuation. 

Here are 10 companies from the BSE200 that have seen the biggest decline in their share price and valuation ratios — trailing trailing P/E and P/BV ratios — in the last one year, as well as in the last five years. Nine of them have not only seen high double-digit fall in their share price in the last one year, but also on a five-year basis. These stocks are currently trading at a trailing P/E discount of 30-50 per cent from their five-year average earnings multiple. Their current P/BV ratio shows a similar discount. This offers a good entry point for long-term investors, at least in stocks with extremely low valuations on a historical basis. 

 

PI Industries

 

The custom synthesis and manufacturing (CSM) segment (three-fourths of revenue) witnessed a sharp slowdown in 2025-26 (FY26) due to weak industry demand, elevated channel inventories globally, and customers adopting a cautious just-in-time procurement strategy, resulting in a volume decline.

 

Even in the June quarter, volumes fell 8 per cent year-on-year (Y-o-Y) (revenue down 10 per cent) amid muted demand in the global agrichemicals market, competition from generics and higher input costs due to the West Asia war.

 

Despite the weak start, the company has reiterated full-year guidance of a low single-digit growth, supported by recovery in the exports business in the second half of FY27 and gradual ramp up of the pharma and biologicals businesses.

 

Factoring in a muted first quarter (Q1), JM Financial Research has cut its FY27/28 earnings estimates by 7-13 per cent. 

 

Infosys

 

Valuations for Infosys and across the sector have corrected sharply following recent artificial intelligence (AI)/tooling developments and rising concerns around traditional revenue deflation, productivity-led pricing pressure and disruption to legacy services.

 

Performance continues to undershoot expectations as Q1FY27 constant currency revenue growth on a sequential basis came in at 1 per cent. Revenue was weighed down by a 50 basis points one-off from a client program termination, softer-than-seasonal volumes, and higher offshoring.

 

The company cut its FY27 revenue growth guidance to 1.5-3.0 per cent from 1.5-3.5 per cent.

 

Demand remains uncertain with elongated decision cycles and cautious discretionary spend, HDFC Securities said. The brokerage has cut its estimates by 1 per cent and lowered the target multiple to 15 times from 16 times, citing continued uncertainty and guidance cut. 

 

Dabur 

 

The stock is at multi-year lows, given the muted sales and volume growth.

 

Revenue grew 1.3 per cent in FY25 and 5 per cent in FY26, with lower urban consumption recovery, competitive and margin pressures weighing on the stock.

 

Among segments, weak performance in beverages, health supplements and over-the-counter and ethicals have resulted in moderation in revenue contribution.

 

Though volume growth in the past couple of quarters has normalised, Religare Research believes near-term growth could be marred by weak consumer spends and high competitive intensity. Valuations do not discount medium term earnings risk, it added.

 

The company is eyeing double digit consolidated revenue growth in FY27, as well as gradual expansion of margins.

 

However, weaker than expected monsoons will impact rural demand and pose a downside risk to earnings, given Dabur’s relatively higher share of the rural market, pointed out Emkay Research. 

 

Havells

 

Havells’ performance in FY26 was impacted by the loss of volumes in summer products, due to muted summer and prolonged monsoon.

 

This was compounded by changes in Bureau of Energy Efficiency norms in room air conditioners and fans and 40 per cent inflation in copper and aluminium prices.

 

In the June quarter, a staggered pass through of rising costs and higher advertising and promotion costs have had an adverse impact on its margins. 

 

Entry of UltraTech into wires and cables, which is Havells’ largest segment by revenue, and inability to pass on the additional costs could dent margins further in the coming quarters, say analysts.

 

Some brokerages believe that despite the correction and multiple risks, valuations have not corrected enough and the stock is trading at higher levels than peers.  

 

Godrej Properties

 

The stock and Nifty Realty have been under pressure, especially over the past month, given worries that rising global yields and inflation pressures could lead to higher interest costs for developers and consumers. 

 

While Godrej Properties delivered strong pre-sales growth of 22 per cent Y-o-Y in the June quarter and collections rose 18 per cent Y-o-Y, aggressive growth in construction payouts at ₹2,200 crore were up 54 per cent Y-o-Y and led to a weak operating cash flow, which was down 80 per cent Y-o-Y, said Kotak Research.

 

The company has indicated that it will strike an optimum balance between growth and cash generation.

 

With land costs largely paid, HSBC Research expects a significantly higher share of collections, higher margins benefiting from price appreciation, and increase in operating cash flows going ahead.

 

Progress towards 20 per cent return on equity and its sustenance and free cash flow generation will be next drivers of stock performance, the brokerage said.  

 

SBI Cards

 

SBI Cards and Payment Services has seen a sharp de-rating in its valuation and performance in the last year.

 

The stock is down 23.3 per cent in the last one year, underperforming the benchmark Sensex by a big margin.

 

The underperformance has been driven by a rise in credit cost and its adverse effect on the company's net interest margin (NIM).

 

According to Axis Securities, SBI Card's NIMs were down 28 basis points in Q1FY27, owing to higher cost of funds.

 

The credit card issuer also faces challenges from a potential rise in delinquencies from stress in the job market, especially in the information technology services sector.

 

The stock is currently trading at a trailing price to book value ratio (P/BV) of 4, which is a 45 per cent discount to its 5-year average P/BV of 7.24. 

 

HDFC Life Insurance 

 

HDFC Life Insurance has been a laggard in its industry. Its stock price is down 31.5 per cent in the last 12-months, grossly underperforming the broader market and its peers.

 

Brokerages attribute this to the company’s slower than industry growth in gross and annualised premium equivalent (APE).

 

HDFC Life’s gross premium income was up 14.4 per cent Y-o-Y in Q1FY27, while APE rose 7 per cent Y-o-Y lagging private industry growth of 15 per cent Y-o-Y, according to Elara Capital.

 

The company's growth was partly affected by a weak growth at HDFC Bank bancassurance channel — one of the biggest sources of new customers for the insurer.

 

Its earnings growth also remains soft as its adjusted net profit was up 11.9 per cent Y-o-Y in Q1FY27.

 

Trailing price to earnings multiple is down to 28.8x, 33 per cent discount to its 5-year average of 43x. Its P/BV is down to 5.84, 35 per cent lower than the 5-year average of 9. 

 

Ambuja Cements

 

Adani group owned Ambuja Cements has been another laggard as it struggled to grow its revenues and earnings on a sustained basis in recent quarters.

 

The cement maker’s stock price is down 30 per cent in the last one year, underperforming the broader market and peers such as Ultratech Cement.

 

The company's consolidated net sales were down 7.7 per cent Y-o-Y in Q1FY27, while its net profit fell 29.1 per cent Y-o-Y in the quarter.

 

It also faces margin pressure from higher energy costs. Ebitda margins were down nearly 370 basis points to 18.3 per cent Y-o-Y in Q1FY27.

 

Poor show on bourses has led to sharp decline in Ambuja Cements’ valuation with trailing price to earnings multiple down to 20.5x, 40 per cent lower than its 5-years average earnings multiple of 33.9x.

 

Its P/BV ratio has declined to 1.66, nearly 35 per cent lower than five-year average ratio of 2.53.

 

Brokerages expect a better show from the stock due to a combination of low valuation and growth revival. 

 

HDFC Bank

 

The country's largest private sector lender HDFC Bank has seen a sharp decline in its share price and equity valuation over growth concerns.

 

The share price is down 26.8 per cent in the last 12 months and has also fallen on a 5-year basis.

 

The bank’s gross interest income was up just 3.7 per cent Y-o-Y in Q1FY27, while net profit rose 18.4 per cent Y-o-Y, largely from a decline in provisions for bad loans.

 

It is now one of the lowest priced large cap stocks, with a trailing P/E of 13.8x, nearly 30 per cent lower than its 5-year average valuation of 19.44x.

 

Similarly, its current P/BV ratio of 1.78 is nearly 36 per cent lower than five-year average ratio of 2.77.

 

Analysts attribute the poor show to market concerns about governance and operational challenges post its merger with HDFC around three years ago.

 

Analysts at Motilal Oswal Securities maintained a “buy” rating on the stock, as a new leadership team takes charge, with hopes it will deliver improved financial performance from FY28. 

 

Avenue Supermarts

 

Avenue Supermarts is facing headwinds from slowdown in consumer growth and challenge from quick-commerce firms in the grocery segment.

 

The general retailer’s stock price has fallen nearly 20 per cent in the last one year. It is also down on a 5-year basis.

 

Analysts at Emkay Global see more downside for the stock due to a slower ramp-up in new store additions, lower growth in bill size (up only 1.5 per cent in Q1FY27) and expensive valuations.

 

The company’s revenue rose 14.9 per cent Y-o-Y, while adjusted net profit grew 11.3 per cent Y-o-Y in Q1FY27.

 

The growth was inadequate, given its still pricey trailing P/E multiple of 78.5x and price to book value of 10x.

 

It also faces challenges from continued losses from its e-commerce venture and a further decline in return on invested capital, after the board approved issuance of non-convertible debentures worth ₹1,000 crore.