0

0

0

0

0

0

0

0

0

This article is more than 3 month old.

IT shares to sustain high valuations, demand momentum, says DSP Investment's Vinit Sambre

Mini

The Dalal Street veteran feels that though IT seems to be trading at a higher range, it is rightly justified given the current environment.

IT shares to sustain high valuations, demand momentum, says DSP Investment's Vinit Sambre
IT has been leading from the front in the latest leg of the market rally with experts staying positive on the sector. Major stocks from the IT pack, which has the second-largest weightage in the 50-scrip Indian equity benchmark Nifty50 after financial services, have given market-beating returns in recent times.
"The way to look at the IT sector is growth prospects. The sector is actually giving the visibility for over the next one or two years, and I believe the growth prospects are becoming only stronger," Vinit Sambre, Head of Equities at DSP Investment Managers, told CNBC-TV18.
"I believe that this trend of good demand momentum is likely to sustain which also means that the valuations that are looking on the high side would sustain. That is because generally the other metrics for these companies always remain good," he said.
The Dalal Street veteran feels that though IT seems to be trading at a higher range, it is rightly justified given the current environment.
Shares of India's top five IT services providers by market value have risen 61-130 percent in the last one year. In the current year so far, Tata Consultancy Services (TCS) has risen nearly 20 percent, Infosys 28 percent and Wipro 38 percent. Tech Mahindra has risen 30 percent and HCL Technologies 15 percent.
The Nifty IT index — which tracks 10 major players in the sector — has given a return of 38 percent so far in 2021, against benchmark Nifty50's 18 percent.
"Whenever you talk to these (IT) companies, the narratives which are coming out from the management, their commentaries, they are pretty much confident and we are actually seeing that happening. Most sectors want to come up the technology curve. If you look at the arrow, see the cash generation, the dividend payouts, they are all great," said Sambre.
"It is just that the growth generally remains elusive. And once you have the growth metrics coming back, I think the stocks pretty much deserve to trade at a premium valuation," he added.
Indian IT companies staged one of their best performances recently, with most of them posting improved FY22 outlook for Q1.
next story