ET Now: Tech is going to be more mainstay for everyone’s life, but in India, hardly any tech stocks are available that you can really benefit from. What are your thoughts on this point?
Sandip Agarwal: I agree that the largecaps have become 4-5% PAT growth stories, and if you take the buyback into account, maybe 6.5% EPS growth, and that is not exciting because the multiples are not low. So, they are basically quasi-cash, where you can chip in and chip out like FDs. The only difference is, in FD, you get returns every month, and here, if they have not given a return for six months, if you buy, you can get 10% immediately, so that is the way sector mature players are playing out. I feel that right now is the situation when the growth rates have really, really, really trickled down substantially. I honestly don’t see how they can go up because the challenge is that earlier the technology cycles were like 10 to 15 years, and so what used to happen is that when new technology used to come, we used to see an 18-to 24-month period of disruption.
ET Now: Your thoughts on the same that yes, tech is leading, but in a different way, not just the traditional way, but it is the newish tech companies rather that are taking the lead. Which companies do you believe will become even bigger or giants? Which companies do you believe will become even bigger or giants in the next five years?
Sandip Agarwal: So, all the companies which you named, they are going to do well in the long term, but the only problem is a very high volatility and whenever the risk quotient goes up, because these companies generally burn lot of money, the stocks see lot of volatility, and then the patience of investors goes out, otherwise as mentioned the traditional IT software services you cannot expect more than 4-5% growth in long-term and it does not make really a case to buy them. So, the case is only in this new-age technology. The problem is that we have a very-very high volatility at some point in time because of multiple reasons, and at that point in time, people lose patience and these stocks crack like anything, and that is the reason many times long-term investors do not come in. So, I broadly believe that the small-sized IT services traditional companies or mid-sized traditional IT companies can still deliver some return because they will move up to a largecap or in between three to five years. We will get one six-month period when everyone will make money because the new technology which has come, it will become process oriented and there will be some good growth for one or two quarters which can happen if this tariff issue gets settled in next one or two quarters, you can make some money, and then again it goes down.
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