Tactical Moves in IT?
According to Agarwal, “The sector has underperformed for a long time. People are hoping for positive commentary this result season, which could have triggered defensive buying. But large-cap IT growth is now low single digits, with high PEG ratios, so structurally we are not positive on the sector.”
Rate Cuts and Bottoming OutOn whether rate cuts could help, Agarwal said, “Dividend yields are becoming attractive, so some fund managers may buy. But large-cap IT will remain a 5-6% growth sector. The bottom may come when forward multiples fall to 13-14x for large caps and 18-20x for midcaps.”
Fundamentals vs RallyAsked about the rally’s sustainability, Agarwal noted, “It is not a fundamental rally. A 4-5% growth industry doesn’t justify the current multiples.”
Opportunities in E&RD and PlatformsOn pockets of interest, Agarwal commented, “We like E&RD for its growth, but valuations are high. We prefer platform companies, which are scaling fast and offer more clarity and visibility. We’ve shifted much of our portfolio there.”The “Mag-7” of Indian Consumer TechRegarding favorite consumer tech stocks, Agarwal said, “The Mag-7 are very bullish picks. In 10-15 years, these could individually reach $1 trillion market cap. India has a huge population, and these platforms are leveraging human resources brilliantly. We are very bullish on them.”ConclusionAgarwal’s view suggests short-term rallies may occur, but structural growth in large-cap IT is modest. Platform-focused consumer tech, however, remains a compelling long-term story.
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