On IT sector
I think the worst of IT may be behind us. We will have another quarter or so and if I could put my money on Nasdaq below 10,800, I would buy a lot of those stocks, a lot of the bad news is in. Those stocks have corrected 50% and beyond…
You said that or the IT sector may see not that great numbers but markets had already priced that in. Is what you are trying to say?
They have priced everything and to eternity. These are cash rich companies. They work on outsourcing and the new themes whether it is AI or cloud computing. They are very ingenious about how they are working and none of them have given any warning. The only thing was
at 15.5 to 13.5, we may be at the lower end because of Budget.
This year has been a tale of two cities. If you were stuck with Infosys and did not migrate to ICICI then you are saying this is not a bull market but then you have to smell what is going on around you and you have to be aware of the PSU banks were the most hated and now suddenly people have woken to the fact that they exist and they are profit making and they trade at half time price to book. So Tech Mahindra would be my stock pick over there, the BFSI space the alliance with British Telecom is a very sweet spot and Tech Mahindra is perfectly fitting the bill with hardly any downside and maybe a 40% upside if things get back to normal.
I am always positive and I think geopolitics and the Fed are all getting priced in.
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Which Motherson company do you like now that there are three Motherson companies and why?
Auto was supposed to be the worst sector in the last two years and now look at the waiting list for . I was with one of my clients in the last three days who is one of the largest Toyota dealers and he had a booking of the new Lexus SUV which is worth Rs 3 crore. He has 12 bookings! That tells me someone is putting his money where his mouth is.
Autos are very under owned and the cycle from motorcycle to scooter to Alto and Ertiga is all about aspiration. is a mother of all as far as the OEMs go. I am talking of Samvardhana. They have just got a large contract from Boeing for interiors and they have set up a plant in Algeria. They have always promised a lot and their bread and butter comes from Europe even though the India numbers are very strong and after , they and Motherson take the cake.
I am also looking for Europe coming back in a big way. The recession talk always muddles you but October numbers in auto are telling me that European sales in the last two years were the highest and when you come back out of all this hiatus, then OEMs will be the one. So, at these prices, this is the cheapest largest OEM which has a global presence and can be a very big outperformer, even a doubler from here is possible.