Underweight on IT with a preference for HCL Tech: Pramod Gubbi

In a chat with ET Now, Pramod Gubbi, VP, Institutional Equities, Ambit Capital shares his views on IT sector.

ET Now: What are you advising clients to do and what are they asking you when you talk about IT because the stocks are trading at premium valuations?

Pramod Gubbi: We think the market is a bit ahead of itself in terms of putting a premium on some of the IT stocks particularly on the back of what we are seeing as a recovery in demand as well as tailwind in the form of currency.

Clearly TCS has brought along with itself the market to these levels but at 19 times earnings even a super executional like TCS we think is a bit over price if not fairly priced at best.

The other two are still in recovery mode -- Infy and Wipro where we think is still a while to go before we think that the recovery engineered by the management change are sustainable, again at 15 times perhaps too much is being priced for these.

The only name we are positive is HCL Tech particularly given the valuations, we think there is ample cushion on the downside at the same time leaves you open to play the US recovery with valuation support. So our sense is overall sector we have seen the best though underweight IT with the most preferred exposure being HCL Technologies.