Stick to TCS, Infosys among IT and VA Tech Wabag: Rajat Sharma, CEO, Sana Securities

In a chat with ET Now, Rajat Sharma, CEO, Sana Securities, explains why diversified IT stocks and pure plays make good trading ideas. Excerpts:

ET Now: Coming to IT, now that all majors are out with their earnings -- some disappointments and some positive surprises at each end, IT is becoming a rather company specific story. Tell me which company do you like and what makes you bullish on that one?
Rajat Sharma: I have had both Infosys and TCS in my portfolio for a very long time and both of them have posted stellar results. If you look at the guidance for FY17 for Infosys, it is around 12-14 per cent for TCS. Again it is in the same region. I think IT as a whole and not just the largecap stocks have become stock specific. KPIT results were really positive going forward. You would stick to some of these largecap IT stocks, both TCS and Infosys. I would like to avoid HCL and Wipro. Wipro I have avoided for a very long time purely because of the concentration they have towards telecom sector which I do not think could be great clients going forward. But TCS and Infosys seem to be the most diversified IT companies and I would like to stick to them.

ET Now: In terms of earnings that are going to come out next week, what would you watch out for? Eicher, Adani Ports, HDFC and a bunch of these midcaps are coming out with results. What is it that you watch out for the most?
Rajat Sharma: I am actually looking out for results of some of the oil and gas majors and some of the other banking stocks to come out. I am watching HDFC Bank’s results very closely. ONGC is a stock that I am looking out for. I think these are the kind of stocks that I am looking to buy while the market is choppy. Oil and gas sector results would probably be most interesting to watch out for because if the results are bad for ONGC, that too presents an opportunity to buy but it is not like at the current price you cannot buy that stock. So should I enter this stock right now or should I buy post the results? Having said that, I have bought ONGC at Rs 220, I have bought it at Rs 190 and my general view is that the results could be good but that is an interesting result to look out for.

ET Now: Very quickly tell our viewers why a VA Tech Wabag is something that you like?
Rajat Sharma: This is one stock which is in the infrastructure space. You hardly find stocks with low debt and this company has absolutely no debt and it is actually playing on the water treatment theme given that there is such a severe water shortage in the country. So that is getting reflected in the books for this company. Over the last four years, the order book for the company grew at an average of around 15 per cent year on year but just in the first nine month period for FY16, the order book has grown 60 per cent.

That is not so far reflected in the revenues but going forward in the next few quarters, this company could post very good results and that is one reason why I am really positive on the stock. Also it is a pure play water theme stock. No other company in India is a pure play in this water treatment space. So this is one of the stocks you would like to buy and hold on for a very long time in your portfolio because this theme as in general going forward could get a lot of interest from investors