Infosys uncertainty would hasten people’s perception: Ajay Garg

In a chat ET Now, Ajay Garg, Equirus Capital said the Infosys uncertainty would hasten people’s perception to that end. He also said that the buyback and the unprecedented level of cash being paid out by the IT companies are very less. Edited excerpts:

What is your view on Infosys post the big exit of Vishal Sikka?
After a very long time, the gap between the large-cap and midcap IT has narrowed down dramatically in terms of PE multiples and that is reflected in the the way the market is looking at the stocks. Any significant instability or move at the management team level would cause that type of a reaction and the gap indicates that midcap IT companies which are much easier to manage and could be better bets to play the sector rather than the large-caps. The Infosys uncertainty would hasten people’s perception to that end.

Do you think the IT companies with such exit, to small, to marginal growth? Do you think it is still not a sector to go overweight on like what do you make of the sector at large?
With so much of uncertainty it does reduces the horizon of your call. The buyback and the unprecedented level of cash being paid out by these companies does sort of you give you a little. But at the same point of time the companies have historical level of cash which they can give it out in these few buybacks. If the future continues to be uncertain on the growth and margin front then I do not know whether people can really take a unilateral call on overweight on this one.

Can you tell a bit about the conference? what is the participation like?
This our third edition of the Gujarat Conference which we basically focus on given our teams based out of Ahmadabad, the focus is on Gujarat based companies. We have all our leading companies in Gujarat - Astral, Arvind, Symphony, Gujarat Gas, GMDC, Meghmani, Monte Carlo, AIEA, who are participating in this conference and we have around 20 companies in this conference today along with around 35 institutional investor groups reflecting on 50 investors.

Which are the sectors that you are liking at the moment and the companies in those sectors?
The last six months there have been significant things happening both from at the policy level and quite a few other data points. For example, there has been a significant thrust by the government on the infrastructure spending so investors are looking at what sort of impact all the companies in the construction and capital goods space who are attending the conference today are going through. Then there is this GST implementation which will affect lot of consumer and companies which have different logistics and distribution framework so that impact is being understood. Third, obviously is what we have seen in the speciality chemical space also that over the last couple of years as the pharma has been getting de-rated we have seen the speciality chemicals space get re-rated and lot of companies have been going up in there. With continued performances on the ground, so I think the interest is to understand what is going on there.