Largecaps offer a rare valuation opportunity, says Sohum’s Sanjay Parekh

The recent correction in Indian equities has opened up one of the most attractive opportunities in largecap stocks since the COVID-19 market crash, according to Sanjay Parekh, Founder & Chief Investment Officer of Sohum Asset Managers, which manages over ₹229 crore in assets.

The proposed Jio Platforms initial public offering (IPO) offers reasonable valuations for a business that is evolving into a digital technology platform, he said.

He said the fund has increased its equity allocation as domestic fundamentals remain resilient despite global uncertainties and believes investors should use the current market weakness to build exposure.

Parekh said both the Reserve Bank of India (RBI) and the government have acted quickly to stabilise markets, while the recent correction has already priced in most of the global risks. He expects investors to benefit from increasing exposure to equities over the coming months. "It is really time to clearly increase allocation to equities," he said.

Parekh said Sohum's internal valuation framework indicates that expected returns from its portfolio are the highest seen since the pandemic-driven market lows. While he cautioned that these are projections and not guarantees, he believes attractive bottom-up valuations outweigh the current macro risks.

He remains particularly constructive on largecap companies, especially in financial services, telecom and diversified conglomerates, where his valuation models indicate upside of around 20-25% or more. According to Parekh, heavy selling by global investors and relatively lower domestic institutional flows into largecaps have created valuation gaps, while corporate balance sheets remain healthy. He added that the fund is gradually deploying cash rather than attempting to time the exact market bottom.

On the proposed Jio Platforms IPO, Parekh said investors should view the business as a digital technology platform rather than a traditional telecom operator. He argued that the market is underestimating the company's software, enterprise services and digital ecosystem, which could become larger contributors to revenue over the next three to five years.

Parekh said Jio Platforms' investments in applications, enterprise solutions, operating systems and digital infrastructure position it for multiple growth drivers beyond connectivity. "It is not a pure telecom play. It's an entire digital tech play, which is really underappreciated," he said. He added that strong cash flows, expected debt reduction and new service revenues support the IPO valuation, making it attractive for investors with a one-to-three-year investment horizon.

For the full interview, watch the accompanying video



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