Scope for further improvement in valuation multiple for midcap IT stocks: G Chokkalingam, Equinomics

In a chat with ET Now, G Chokkalingam, Founder, Equinomics Research & Advisory Pvt Ltd shares his views on the midcap IT space. Excerpt:

ET Now: What is your view of midcap IT space?

G Chokkalingam: The numbers of Hexaware do not please but I would still advise to hold on these stocks because firstly, these kind of stocks are still trading at 7-8 PE on one year forward earning.

I see scope for further improvement in the valuation multiple for many of these midcap IT stocks because there would be few more mergers and acquisitions since even the large companies are growing in single digit in dollar term.

Secondly, if by any chance the political outcome goes for a toss, then we will have a big hit on the rupee. In such a scenario, these companies can help us. Therefore, I would suggest investors to hold on to all these midcap IT stocks.