Expect TCS and HCL Tech to continue to do well: Ankita Somani, Angel Broking

In an interview with ET Now, Ankita Somani, Research Analyst-IT, Angel Broking, shares her views on tech stocks. Excerpts:


ET Now: We have had a couple of days to digest the numbers, hear the concall. What is the say on Infosys now? What do you think the stock does over the course of the next three months?

Ankita Somani: Definitely the numbers of Infy were quite encouraging, but the company has been giving volatile results since the last three to four quarters. So I really cannot say that it is a breakthrough quarter for Infy. Definitely some parts of their strategy are definitely falling into place and that is why their onside volumes have grown up. And I expect the revenue stream to continue because there were some ramp up in the onsite projects and all, but would watch out for one more consistent quarter from Infy at least in terms of revenue growth. Then only probably I can say that Infy will be growing again at par with its peers.

ET Now: I am sure on the conference call you would have gotten a better idea on what the management hopes to do with the guidance going forward. Is there risk of a guidance revision still or that is pretty much off the table?

Ankita Somani: See, Infy did about 2.7% in this quarter and in fact to achieve that 10%, the upper end of their guidance they hardly need 1.5% CQGR in the next three quarters. So the probability of achieving or exceeding the guidance is high after their Q1 performance.

ET Now: What does the Infy results mean for the other tech majors, especially for TCS and HCL Tech?

Ankita Somani: Infy is one company which has given volatile results, but TCS is a consistent performer, so is HCL Tech. I expect TCS and HCL Tech to continue their run. I am expecting TCS to report about 4% dollar revenue growth. Again HCL Tech is expected to report about 3.2 to 3.3% dollar revenue growth. So I expect these two companies to do very well.

ET Now: What is the expectation from Wipro then?

Ankita Somani: I am still not that positive on Wipro. I am expecting the company to report about 1% kind of dollar revenue growth at least for this quarter and would again watch out for management commentary going ahead.

ET Now: Do you track Tech Mahindra and if indeed they go head and buy the IT services business of Polaris as it is widely speculated for some of either $300, $350, $400 million as the case may be, is it net positive for the stock or do you believe the cash outflow is net negative for the stock?

Ankita Somani: No, I believe this move is positive. Tech Mahindra, once it is getting merged with Mahindra Satyam, now it’s is a cash positive company on a net-net basis. A am sure the company can definitely use its actual situation and again leverage its balance sheet a little. In terms of Polaris, definitely because even after merging the total revenues from BFSI in Tech Mahindra is coming at just about 10% and once they get Polaris into their portfolio, definitely their revenues from BFSI would increase. Citi being one of the major clients of Polaris. So in that sense fundamentally it is definitely positive for Tech Mahindra.

ET Now: From the midcap IT space would be your top idea?

Ankita Somani: In the midcap IT space, definitely Tech Mahindra is one of my top picks.