Aniket Pande of Prabhudas Lilladher believes that earnings surprises in the IT sector will continue and valuations for the sector will remain high.
"Among largecaps, we like TCS compared to Infosys right now, the rationale being when you compare to the size, TCS is 1.6 times of Infosys and both are growing at the same revenue and EPS CAGR. Similarly, the valuation discount had narrowed down just 2-3 percent," he said in an interview with CNBC-TV18.
When compared to Infosys, TCS looks more prepared to handle the supply-side issues, according to him. "In the next quarter, there is no wage hike pressure that will come in for TCS. So, at this price point, in largecaps, we like TCS as compared to Infosys," he explained.
Apart from that, HCL Tech and Tech Mahindra are offering good valuation support to the sector. "When it comes to relative valuations these names look excellent at this price," said Pande.
Prabhudas Liladhar expects Wipro to show an organic growth of 3.5 percent in this quarter and consolidated revenue growth of 12 percent. "There would be slight pressure on Wipro’s margins due to the Capco acquisition, which is expected to normalise in the coming quarter. Wipro is also expected to post a strong quarter this time. Under the new CEO, the company has gone into a different horizon," said Pande.
On the midcap side, the brokerage likes Mindtree, Mphasis, Coforge, and L&T Tech Services. "These companies will continue to deliver exceptional performance on all fronts," said Pande.For more, watch the video