In the short term, HCL might outperform even Infy: Urmil Shah, IDBI Capital

In a chat with ET Now, Urmil Shah, IDBI Capital, says Infy and HCL Tech remain top picks among IT largecaps, followed by Tech Mahindra, TCS and Wipro. Edited excerpts



ET Now: After almost a 19% underperformance on a one year basis, the HCL Technologies numbers are great. Do you expect the stock to show a big pop when it opens for trade?
Urmil Shah: Yes, certainly because to our numbers, it is a beat across revenue, EBITDA and earnings. As we have said earlier, HCL is one of the under-owned stocks. So a positive surprise and more importantly the strong outlook for FY17 is heartening and that would mean that they would grow at higher than the industry which is after quite some time for the stock and the valuation is also on HCL side over here. So there is quite a bit of chance of rerating in the stock so we in fact, HCL along with Infy has been our top pick for some time now and we in fact see a target price of 967 which is based on 16 times on FY18 earnings.

ET Now: Does the pecking order within the IT big boys change now and is HCL Technologies now at the top of the ranks?
Urmil Shah: So Infy and HCL Tech have been our top picks amongst the IT largecaps. We would continue with that followed by Tech Mahindra, TCS and Wipro would be the last. So in the short term, HCL might outperform even Infy but we like both the stocks from FY17-18 growth point of view, so both are our top picks.