SageOne Investment’s founder and CIO, Samit Vartak, has publicly warned that the current market lull still hides value traps—large IT and defence names that are rattling at 80‑90× P/E, a figure that dwarfs the 15‑20× multiples seen in some smaller peers. New data from the BSE filings shows that these high multiples are a product of short‑term momentum rather than sustainable growth, and Vartak has openly acknowledged the risk of a correction.
Turning the lens to mid‑cap non‑banking financial companies, the commentary notes a dramatic compression of P/E ratios from nine or ten to a range of 4‑4.5×. This slide is backed by the latest quarterly reports, which show ROA hovering around 15%—a level that suggests the sector still holds earnings potential if entered at the right price.
Vartak’s stance on defence stocks reflects a deeper layer of scrutiny: while larger names can command 80‑90× multiples, their heavy capital‑expenditure cycles and long product lifecycles mean that a slowdown can quickly erode share prices, pushing their multiples back to the 10‑15× band. He prefers companies with consumable, annual revenue streams such as ammunition, which provide a steadier cash flow profile.
The investment house’s avoidance of IT exposure is equally deliberate. Vartak requires at least 20% earnings growth to justify a position, and most IT firms fall short of that threshold. Even the high‑growth techs that trade at 80‑90× multiples exceed the firm’s valuation comfort zone, leaving Vartak with no IT holdings in its portfolio.
Looking ahead, Vartak signals a continued focus on bottom‑up, long‑term structural growth stories. He plans to monitor mid‑cap NBFCs that have slipped into the 4‑5× P/E range for buying opportunities, while staying cautious of high‑multiples that could prove either over‑valued or short‑sighted. The strategy is clear: seek quality companies at defensible prices, rather than chase momentum or rely on future re‑pricing.