Gautam Duggad, Head of Research – Motilal Oswal is very bullish on the IT sector.
- The last 3-4 months have been good for IT companies.
- He expects the performance to continue in the current quarter also.
- He mentions many positives for the sector: attractive valuations, solid free cash flow generation, strong balance sheets, and falling Rupee against the Dollar.
- NIFTY IT index was up 8% in 2018 so far.
- “We are expecting that in a structurally adverse environment for IT, CY18 could offer a cyclical reprieve. Given the current valuations, there is still some room for IT companies to keep doing well because they are still trading in the 15-16 band (P/E ratio). TCS is available at around Rs 19-19.5 one year forward. Technology is making a big comeback after seven-eight quarters of sluggish growth. We are expecting a double digit profit growth,” he said.
- He is going after mid-level IT companies for good growth.
- Kotak securities is also very bullish about the sector.