Valuations clearly above long-term averages: Shibani Sircar Kurian

economictimes.indiatimes.com:

«Of course, IT as a sector has been underperforming for quite a while. So, if you look at the numbers that have come out from three major IT companies, the numbers by and large by themselves have been largely in line with estimates,» says Shibani Sircar Kurian, Kotak Mahindra Asset Management.Have to talk about IT, does it come as a surprise that the market is actually willing to give the sector the benefit of doubt that maybe the worst could be behind with Q1?Of course, IT as a sector has been underperforming for quite a while.

So, if you look at the numbers that have come out from three major IT companies, the numbers by and large by themselves have been largely in line with estimates. Management commentary too has been somewhat cautious in terms of calling out improvement, at least in the near term.

I think one key factor that really stood out was that the deal-win trajectory in most of the companies that have reported numbers have remained fairly resilient. So, what that possibly is showing us is that while client decision-making cycles have been elongated and conversion from deal to revenue is also taking time, but overall, the momentum, at least in terms of the medium-term outlook from most of the clients remains fairly positive and remains intact.

And therefore, that is why you are starting to see numbers in terms of the deal wins remaining largely intact. Near term, of course, even in the next quarter, we will possibly have to contend with muted growth outlook.

And it is possible maybe towards the second half of the year, the expectation at this point in time is that we will start seeing possibly some improvement in terms of the revenue momentum. If you look at the way the sector has behaved, the overall midcaps