ETMarkets Fund Manager Talk: Rs 58,900-crore fund manager explains one factor that may help sustain valuation gap between large and midcaps

Sohini Adnani says: “I​n an improving economic scenario, the earnings upgrade cycle for midcap stocks is far more robust as their size allows higher percentage growth in revenues and improvement in margins, which leads to superior earnings growth versus largecap companies. This leads to better valuation rerating for midcaps versus largecaps. If you look in absolute terms, even returns in large cap funds are above average during the last year but obviously not as robust as midcaps.”