The quest for value

The recent turmoil in global stock markets has again brought the search for safe sectors in vogue. There are three primary defensive sectors: FMCG, pharma and technology. FMCG is trading at lifetime-high valuations, so there's no value to be found there. That leaves us with pharma and technology. But here also it is difficult to find value. The CNX Pharma index trades at 77 times earnings. That's no value by any account. The most expensive pharma stocks include Piramal Enterprises, at 102 times earnings, GSK Pharma, at 77 times earnings, and Glenmark, at 70 times earnings. The market favourite Sun Pharma too trades at pricey 49 times earnings. In terms of three-year EPS growth, Glenmark is the most expensive stock, with a three-year PEG ratio of 6.5. Cipla is at 5.3. And Sun Pharma is at 5.27. Major pharma stocks Company NameTTM P/E1 Y return (%)1M return (%)EPS CAGR-3Y (%)PEGPiramal Enterprises104.9238.7314.9481.051.29GSK Pharma75.6922.64-1.2-13.36-5.67Glenmark Pharma62.5146.711.5710.855.76Sun Pharma49.9212.810.639.245.4Lupin40.4449.389.9734.611.17Cipla35.9114.235.756.575.47Cadila Healthcare34.8758.38.0226.961.29Dr. Reddys Lab32.2646.269.5915.042.14Divis Laboratories31.7726.7-1.2414.732.16Aurobindo Pharma29.5372.3813.14143.140.21 The IT Index, at 22 times earnings, is cheaper than the pharma index, but value there is similarly found wanting. Info Edge is the most expensive tech stock, with a P/E of 50. Just Dial trades at 40. Oracle is at 30. And the market leader TCS is at 25. Info Edge and Tech Mahindra are the most expensive in relation to their three-year earnings. Amidst heated valuations, tech does offer some pockets of value: Infosys trades at a TTM P/E of 20. HCL Tech trades at 18. And Wipro is available at 16. The two tables below illustrate the lack of value in the pharma and th