What is the best way to play the IT theme in light of AI? Pankaj Murarka answers

economictimes.indiatimes.com:

Pankaj Murarka, Founder, Renaissance Investment, says “when it comes to IT services, India leads the world and AI gives a new pivot to the whole growth of the Indian IT story over the next five to ten years. IT companies have a new growth pivot which can ensure that they continue this high growth path for the next decade.”There are a bunch of companies coming out with IPOs and getting listed, especially in the small finance space. SBFC got very good reception not only a 40% premium on listing but even follow-up buying. Same was the case with Utkarsh Small Finance which got listed from Banaras and caters to north India as a region. Do you have exposure to that in your portfolio in any manner?One thing I have learned during all these years of my investing is that companies go for IPOs when they are at their best and which is why we tend to have a sort of scepticism towards IPOs because we do not know these companies well in terms of their track record and because companies go to the markets when they are at the best of their business performance.

There is a lot of euphoria and we are in the bull market. The other phenomena we are witnessing is companies getting into IPOs or new companies getting values much more richly than the existing listed universes.

We have stayed away from IPOs because we find more value in credible businesses within the listed space at more reasonable valuations. Having said that, we look at these companies and once you develop a better understanding of these companies and they have some public market track records, we are always looking to invest into these companies.