The optimism in the markets and the ongoing bull run has certainly shirked the IT stocks this time around.. The entire IT sector has underperformed in the current rally and it won't surprise me one single bit if we witness a sharp rally in the prices of the IT stocks, especially with the earnings season just round the corner..
The third quarter earnings will be kicked off by Infosys on Jan 11.. As an investor, my gut feeling is that now is the time to buy into these stocks.. All the major stocks - Infosys, Wipro, Satyam, TCS - are trading at a P/E multiple of 24-26x FY06earnings.. This is a sharp discount to the P/E ratio which these stocks were commanding six-seven months earlier.. The companies are also supposed to report strong third quarter results which should aid their recovery in the times to come.. Also, as the rupee strengthens and the economic scenario in the U.S. recovers, these stocks will improve further, giving a good return to the investors..
I would advise accumulating positions in Infosys and Wipro at the current levels.. TCS as well, and may be Zensar Technologies.. Zensar is an interesting IT firm with a market cap of around RS. 430 cr.. It is trading at a P/E of only 18x its FY06 earnings.. I currently do not have any rating assigned to this stock, will let you all know more if I find the stock worth investing into!!
'Til then, have a great time and enjoy the SenseXXXational Ride!! ;-)
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