No compelling play in midcap IT for long-term investor: Ambit Capital

In an interview with ET Now, Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital, shares his views on mid cap IT stocks. Excerpt:

ET Now: People argue that a 12-15% kind of a run might continue for large and midcap IT and the valuation gap is just too large; it is time to focus on midcaps. Do you not have that outlook?

Saurabh Mukherjea: There are a few mid and small cap IT companies which are doing very well. For example, eClerx is a structurally high quality company and we think it is a long-term buy and it is on our tenbagger list.

Beyond that, it is difficult to find a strong and compelling play in midcap IT, which you can identify as a multibagger that one should hold over the next two to three years. There are currency-driven uplifts in these stocks, but there is little to suggest that these companies have fundamental competitive advantages, which will make them core buys or sensible buys for the long term investor.