IT got substantially rerated due to COVID: Axis MF’s Shreyash Devalkar
Shreyash Devalkar, Senior Fund Manager-Equities at Axis Mutual Fund, believes IT is among the few sectors that got substantially rerated due ot COVID. “All the stocks got rerated, not only largecap, midcap and global IT services companies. The largest ones are trading in the range of around 35-40. This entire space got rerated in the last one-and-a-half year backed by really strong growth, deal wins and very good margins. Also, in the entire sector, tailwinds are definitely there. In the midcap segment, valuations are on a higher side compared to their historical averages on the largecaps, but probably such kind of valuations were there 10-15 years ago, if not in the recent past,” he said.
“But in the midcap, definitely the valuations are at a higher level. One need to take really stock-specific view in this because if these companies that are able to give you 15 percent-plus or higher teens kind of growth, such kind of multiple is sustainable. One needs to look at it from that point of view,” he added.