Sandip Agarwal of Sowilo Investment Managers said the worst of the recent correction in Indian IT stocks is already priced in.
This outlook suggests a potential turning point for a sector that has struggled with global economic headwinds and reduced client spending. If the projected recovery materializes, it could signal a broader return of investor confidence in India's technology services export market.
Agarwal forecasts a 20-30% near-term upside for the sector at the index level [1]. He said the market has already accounted for global slowdown fears and weak discretionary spending, factors that previously drove stock prices down.
Beyond short-term gains, Agarwal projects a 60-70% growth in profit after tax (PAT) for the Indian IT sector over the next three years [2]. This growth expectation is tied to the easing of several sector headwinds, including stabilizing deal wins and reduced indecision among clients.
"We see a 20-30% upside in the near term for Indian IT stocks as the sector headwinds ease," Agarwal said.
He said that the current valuation makes the sector attractive for long-term investors. According to Agarwal, the market is now positioned for a recovery as the instability that characterized the recent correction period subsides.
"The worst of the correction is already priced in, making the sector attractive for long-term investors," Agarwal said.
“The worst of the correction is already priced in, making the sector attractive for long-term investors.”
The projection indicates a shift from defensive to offensive positioning in the Indian IT market. By suggesting that discretionary spending lows are already factored into current prices, the analysis implies that any stabilization in global corporate budgets will act as a catalyst for rapid growth rather than a slow recovery.
