IT sector likely to see further downgrades in next six months, says Andrew Holland
The IT sector may witness further downgrades over the next 6 months. This is not surprising, given the challenges faced by the industry due to the ongoing pandemic and other factors. Some of the key factors to watch this quarter would be the extent of the impact due to the global banking turmoil on the deal wins. One must remember that BFSI is the largest vertical for most IT companies and contributes to nearly a third of the overall revenue.
The IT sector may witness further downgrades over the next 6 months. This is not surprising, given the challenges faced by the industry due to the ongoing pandemic and other factors, said Andrew Holland, CEO of Avendus Alternate Strategies.
Some of the key factors to watch this quarter would be the extent of the impact due to the global banking turmoil on the deal wins. One must remember that BFSI is the largest vertical for most IT companies and contributes to nearly a third of the overall revenue.
In an interview with CNBC-TV18, Holland said, “We are going to see more downgrades to earnings for this sector over the course of the next six months. Don't take anything away from the whole technology build-out over the next 2-3 years, it is going to be substantial as well. So, there will be a time to buy but the downgrades come first, and the prices react to that before dipping toes.”
However, he remains optimistic about the banking sector's growth prospects in the coming months.
When it comes to the consumption space, Holland believes that the beverage sector is an attractive option. The sector has demonstrated resilience and has been performing relatively well even during the pandemic. Holland's views align with those of other experts who believe that the beverage sector is likely to see strong growth in the coming years.
However, there are concerns regarding new-age companies like Nykaa, which may face increased competition from large players. Holland believes that this competition may impact the growth prospects of such companies. It will be interesting to see how Nykaa and other new-age companies navigate this challenge in the coming months.
Despite these concerns, Holland remains positive about the defence and renewables sectors. Both these sectors have significant potential for growth, and there is a lot of interest from investors and businesses in these areas. Holland's views are in line with the Indian government's push for self-reliance in these sectors.
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