Tier-II IT services companies giving better returns: Envision Capital

Nilesh Shah, MD & CEO of Envision Capital, on Thursday, said that better opportunities lie in tier-II IT services companies. Shah further said that Indian tech companies have seen a fantastic run.

Speaking in an interview with CNBC-TV18, he said, “The big opportunity is in tier-II IT services companies, which have different shaded business models and we have seen some of the names where valuations have gone higher because they have surprised terribly in terms of earnings on the positive side and that could continue for few more quarters. So better opportunity in terms of returns is in the tier-II IT services companies.”

“It has been a fantastic run for our technology services companies driven globally by digital transformation, which is currently underway and gaining momentum with every passage of time and Indian IT services companies are huge beneficiaries of this digital transformation which is happening,” said Shah.

According to him, Zomato is a story that is here to stay for decades. “To me, Zomato is a phenomenon which is here to stay for next several years, it’s a story for a decade. This is one of those solid platform opportunities which basically is coming in for public markets,” Shah said.

“However, I do not know how the stock is going to behave on the listing or over the short to medium–term given that valuations are elevated, but over the next 5-10 years, this will come up to be a solid investment opportunity. So, if one is looking at investing in something like Zomato then will have to be ready for a much longer timeframe or not have a timeframe and that’s the best way to deal with it,” he said.

For the entire interview, watch the video.