Now Reading: Goldman Sachs flags lower FCF yields for India, US markets
-
01
Goldman Sachs flags lower FCF yields for India, US markets
A Goldman Sachs report says rising valuations are making US and Indian equity markets less attractive due to lower free cash flow (FCF) yields. The S&P 500 and the Nifty 50 both…
A Goldman Sachs report says rising valuations are making US and Indian equity markets less attractive due to lower free cash flow (FCF) yields. The S&P 500 and the Nifty 50 both offer an FCF yield of 2.7 percent, compared to 5 percent for Europe's Stoxx 600. The report notes that a surge in capex by leading US tech companies, especially for AI, has eroded their premium cash flows, forcing them to seek external funding.
Separately, India's top-listed residential real estate developers saw a moderation in pre-sales in the first quarter of FY27, due to delayed project approvals, limited launches, and high year-ago bases. Godrej Properties led with bookings of Rs 8,651 crore, up 22 percent year-on-year, while DLF reported a 94 percent drop to Rs 657 crore due to the absence of new launches. Analysts said the moderation does not point to a structural weakening, as customer response for new projects remained healthy.
Indian Opinion Analysis
The FCF yield gap between US/India and Europe has been widening as tech giants pour cash into AI infrastructure. This is a shift from the post-2008 period when these firms were capital-light and generated high free cash flows. For Indian investors, the real story is that Nifty 50 companies now yield the same FCF as the S&P 500 but without the AI growth narrative. In real estate, the key metric to watch is Q2 FY27 pre-sales: if approvals ease, launches should pick up and confirm whether demand is truly intact. The next quarterly results in October will settle that question.
Source: rediff.com
This story was synthesised by AI from the source linked above.
