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Our anti-consensus under weight IT stance in late December 2020 and the subsequent rating downgrades (Tata Consultancy Services Ltd., Tech Mahindra Ltd. etc.) witnessed heavy pushbacks given the then price momentum.
Then prevailing street views were largely built upon –
1. extrapolating recovery as long-term growth acceleration and
2. calls for further sector re-rating (even after 58% plus).
Despite the recent correction and under-performance, multiples still remain bloated and higher than global tech in many cases, notwithstanding inferior growth.
We now sense incremental caution in investor conversations in light of heavy NASDAQ / Forex volatility.
Even as broader markets re-rated due to lower rates, the growth – rerating asymmetry is more alarming in IT.
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