As an investor into Indian IT since 2020 lows and adding on upside in 2022 crash…the question I would ask myself is that is the PE of 15-20 that they used to trade at justifiable?
P/E reversion to mean – this question would arise to me only if I believe that earlier PE of 15-20 was justifiable…
Good to know you are an industry veteran. I have been associated with Indian IT for significant time as well…and honestly in 2020 pandemic, I have been converted from a disbeliever to a believer…never invested in Indian IT before 2020, remember in 2015 when I had written off Indian IT considering emergence of new technologies across the globe…and now having seen the tremendous evolution of Indian IT in last 5-7 years and the way they navigated the pandemic – both with Customers & employees…one word comes to my mind…and that is…Magnificient!
Above may not necessarily result in a good investment but what I know is that prior to all this, the PE what the market considers as “mean” does not hold true for me…as I see no reason for such Magnificent companies command a PE of only 15-20…and if at all that “mean” still holds for the market, I would be a buyer at such “mean” PE because the “mean” for me has grown tremendously with the evolution I have closely observed…(I maybe wrong and any dip in growth/recession can bring PE to below this “mean” also)
Disc: Invested hence highly biased. Not eligible for any recommendation. I can be completely wrong in all my assessments
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