Defence stocks dip? Buy the correction, stay for 5 years; go for niche tech over big IT: Sudip Bandyopadhyay

India’s defence rally may see bouts of volatility, but investors should treat every dip as an entry point—only if they are willing to stay invested for at least 3–5 years, says Sudip Bandyopadhyay, Group Chairman of Inditrade Capital. Speaking to ET Now, he emphasised that defence remains one of India’s strongest structural growth stories, even as valuations in several PSU names look stretched.

Bandyopadhyay warns investors not to chase quick trades unless they truly understand short-term volatility. The real opportunity, he says, lies in long-term compounding.

Large defence projects—ships, submarines, missile systems—have long gestation periods. “Deliveries take time. You must stay with the company for the entire cycle,” he notes.

Private players preferred over PSUs

While PSU defence stocks have surged sharply in the past year, making valuations “challenging”, he favours private names for fresh entry.

Top picks:

Bharat Forge: Rapidly scaling its domestic defence business
Larsen & Toubro: One of India’s largest defence contractors with diversified project wins

Smaller private companies, he cautions, may have the same valuation risks as PSU leaders without the balance-sheet strength.

IT sector: Attractive valuations but real challenges remain

IT stocks have corrected meaningfully from their highs, bringing valuations closer to long-term averages. But fundamentals, Bandyopadhyay warns, are still under pressure.

Why he remains cautious on large-cap IT

• US demand remains uncertain despite indications of H-1B and policy support.
• Order flows have not revived.
• AI is reshaping the landscape—and Indian firms lack proprietary products.
• Margin pressure persists because companies rely heavily on third-party AI platforms.

He expects low single-digit growth for most large-cap IT companies in the near term.

Where he finds opportunities in IT

Instead of broad-based IT exposure, Bandyopadhyay prefers niche players with strong domain strengths.

His preferred picks are RateGain Technologies which is benefiting from global strength in travel & tourism;
Coforge, a company that is focused on high-growth verticals and premium service areas

“Pick IT companies servicing segments showing strong global growth. Avoid generic IT service providers for now,” he advises.

The big picture: India poised for broad-based growth

Across sectors—autos, banks, capital goods—corporate commentary remains strongly upbeat, Bandyopadhyay notes. But in defence and IT, investors need to be selective, valuation-aware, and patient.