Midcap IT trading at high valuation; underweight on FMCG sector: Motilal Oswal AMC

Manish Sonthalia, head equities-PMS at Motilal Oswal AMC, on Friday, said that midcap IT companies are trading at high valuations.

In an interview with CNBC-TV18, he said, “The story is good for all the midcap IT names; it’s just the valuation at which one wants to buy. One can argue that these are mid-cycle valuations, so valuations may look elevated. So, names like Birlasoft, Coforge of the world are trading at north of 40 times price to earnings multiples.”

“However, I would be more comfortable with the largecap names even if they are at a higher valuation, because if going is very good for a particular sector then large companies are going to get disproportionate benefits as opposed to the midcaps,” said Sonthalia.