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KRChoksey: Midcap IT - Scope For Alpha, But At The Right Price

Midcap IT stocks have surged 40-100% after the pandemic-marred quarter as hopes of a swift recovery took centrestage.

An image of an Index curve overlays a trader typing on a keyboard on the trading floor. (Photographer: Alex Kraus/Bloomberg)
An image of an Index curve overlays a trader typing on a keyboard on the trading floor. (Photographer: Alex Kraus/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

KRChoskey Report

Revenue for most mid-sized Information Technology firms declined 1-18% QoQ in Q1 FY21 in U.S. dollar terms, as the pandemic impacted demand across verticals, with supply side issues of transitioning to a work-from-home model also impacting growth.

Clearly, engineering research and development (ER&D) firms were impacted more, with the four companies in our sample reporting 9-15% QoQ revenue declines; vertical specific issues for some firms and ER&D investments being discretionary in nature contributed to the greater revenue decline of this segment compared with IT services.

Post 1Q FY21 results, most mid cap IT stocks have surged 40-100%, as expectations of swift growth recovery took centerstage even among under-performing companies.

Increasing criticality of technology, fast-tracked digital investments and company-specific factors have driven stock performance.

Click on the attachment to read the full report:

KRChoksey Institutional Information Technology Mid Caps.pdf

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