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Feb 16
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NEUTRAL
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Unnamed Guest (Head of Mutual Funds)
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Indian IT sector earnings are showing only modest single-digit growth, yet valuations are at a premium (20-22x). There is a disconnect between "modest growth" and "premium valuation." The narrative of AI disruption poses a threat to the traditional "seat-based" billing model of these firms. Without an extraordinary resurgence in demand, the multiples are difficult to justify. AVOID. Wait for mean reversion in valuations. If these companies successfully pivot to becoming essential AI-migration partners, sentiment could reverse quickly. |
Bloomberg Markets
Bitcoin Traders Brace for $60K Shock as Liqui...
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Feb 13
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AVOID
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Raja Chakravorti
Professor of Economics, University of California, Berkeley
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Indian software giants (Infosys, TCS, Wipro) are down significantly (Infosys ADRs down ~9%) due to fears that AI tools like Anthropic will disrupt their business models. Investors are re-rating valuations based on the fear that AI coding agents will decimate the "body-shop" model of legacy IT services. Analysts are downgrading revenue growth forecasts to low single digits. AVOID Indian IT until the disruption impact is quantified. Oversold conditions could lead to a technical bounce; companies may successfully integrate AI to improve their own margins. |
Bloomberg Markets
How AI Is Proving to Be a Double-Edged Sword ...
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