Deven Choksey on 4 mid-tier IT stocks that show a margin of safety

economictimes.indiatimes.com:

Deven Choksey, MD, KRChoksey Holdings Pvt. Ltd, says “today, there is definitely a margin of safety in these kinds of companies. It is not available immediately.

But we believe that there would be opportunity in the market. Some of the technology players in the mid-tier segment, where we believe that the opportunity would be are LTTS, Tata Elxsi and even for that matter, Cyient Technology and KPIT. ”Some of these manufacturing names like Kaynes have become very expensive. The earnings, on a year-on-year basis, is pretty much okay. The revenue is up 50%, margins have improved 120 basis points, the PAT margin has improved by 300 basis points, order inflow has improved but sequentially, there is a dip. Is there still value to ride these stocks on the upside?If you are asking for near-term price outlook, definitely most of the companies have perfected the price as far as their outlook is concerned.

That is where you are probably not getting enough opportunity to earn in the near term. This market is becoming challenging for value picking. Most of the companies' stock prices are discounted two years in advance already in most of the cases.

That is where I think the challenge would lie. However, the market has the habit of rising prices in the near term and those may be available at some point of time at corrective prices. Today, there is definitely a margin of safety in these kinds of companies.

It is not available immediately. But we believe that there would be opportunity in the market. Some of the technology players in the mid-tier segment, where we believe that the opportunity would be right are LTTS, Tata Elxsi and even for that matter, Cyient Technology and KPIT.