IT Stocks Today: Should You Start Buying IT Stocks Now? Deepak Shenoi answers | Jobs Vox


“This is probably the time to start building those positions that you’re going to have to build on top of the news, because I don’t think this is going to be like a trigger, and then when it spikes, it’s going to be a slow workflow.” They will post jobs. The market will mostly ignore deals because when it’s bearish,” he says Deepak Shenoyfounder, Capital Mind

How much worse would it get for IT before the situation improves?
The first signs of anything bullish for them will come in January and February as US budgets begin to be set. Large IT companies will benefit from cost reductions as they have good balance sheets. In all likelihood, the US companies will say that the downloads are part of our company and the invoicers are in the running. The few companies that have the balance sheet for it are the big five in India and they will start benefiting from such deals in the middle of next year, maybe after February and March.

But the market would start appreciating it much earlier. Are you saying now is the time to buy them?
This is probably the time to start building those positions that you will need to build on top of the news, because I don’t think this will be like a trigger, and then when it spikes, it will be a slow business flow. They will post jobs. The market will mostly ignore deals because when it is bearish. The market just ignores all the good news and over time they will start to see these profits start to come to their balance sheet starting with the large caps.

Also read: 2023 will be a much more volatile year and harder to come back from. Deepak Shenoi explains why

So right now we only have large-cap IT companies in our portfolio, but one of the reasons is that it’s very difficult to look at mid-cap companies now because they have weaker balance sheets.

Did you end up buying the M&M car we talked about or are we just adding more positions to the stock?
We bought shares, I went in and tried to buy a car. They haven’t given it to me yet. I had eight months left and drove it all over Nagpur.

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So, it passed the test drive and more…
Now it’s like forget the test, give it to me. Driving is part of the test, but it’s a beautiful car and compares very well in terms of features even with some of the larger even German cars as some have had to drop features due to the chip issues they have. A BMW that doesn’t have, for example, a 360-degree camera, while some of the breaking and roadside assistance systems that the top of the XUV 700 has.

What about stocks that will continue to behave in the same way or is now the time to bet on them?
I will still bet more on M&M than Tata Motors as the latter is more international and international, demand seems to be declining. India seems to be doing better and M&M actually has it. But it’s not just a car company. It has ownership over everything else. There are a bunch of new little things that add up here. We bought it because we like the car company, but also this growth in some of the industrial and ancillary units. The weakest part is Club Mahindra and Tech M.

They have defense jobs.
They have a defense and that’s another part that’s going to happen again because it’s the little things. I hope that Mr. Mahindra decided to spin off some of M&M’s holdings and M&M’s auto parts. Maybe it won’t happen in my lifetime, but let’s see, and let’s hold on to hope there.

This is another space AMC counter that hasn’t seen much action, be it UTI or not. So you expect this to reverse in 2023?
We are AMC ourselves in a way and I hope you are…

Because there is a lot of inflow, but it is not reflected. AUMs are up for you too, but not reflected in share prices?
Two things here. First, the stock has been slightly overvalued over the past year. Even

was the largest AMC when it entered. It has lost significant market share and is now third. and ICICI overtook it, as did ABSL. After the IPO, the performance per piece of market share is significantly lower. UTI has more debt and perhaps that’s where the ownership issues bring out a little more uncertainty because eventually the public sector entities that own it will have to sell their stake.

There is T Rove Price who will actually own it. There are a lot of questions. Nippon is one of the few that excites us, but PE ratios have declined. The problem with AMCs in India is that they cannot do anything else, they can only be in AMC. Would you give money to an NBFC? It could, for example, lend more, but when an AMC makes a profit, it has to give it to shareholders, it can’t start a lending business or anything else in the financial space at all. So that limits the ROE boost you might want in a player like this.

Maybe some of the valuations going back to 15 or 20 PE levels might be fine, but I would like AMC’s holding companies like Motilal to have the ability to expand. We don’t currently own any, but the space could go. AMCs, given this kind of brick wall ROE, we’re going to end up owning them at some point. Unfortunately, we don’t own one even though we are one.


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