IT Stocks Crash After Accenture Warning | Sandeep Sabharwal Decodes What Comes Next | Business News

[00:00:00]on board Sandeep Sabharwal and to give us a sense as to how he's looking at the markets.

[00:00:06]Sandeep, you know that the headline likely to be IT.

[00:00:10]Does this come as a surprise to you in terms of how Accenture has posted numbers? I'm not I'm not sure if you've looked at the fine print of those numbers, but negative read through on Indian IT. How negative from here can it go? That's that's really the the crucial question.

[00:00:29]>> There are two things. One, IT [clears throat] as a segment, the Indian IT companies are no longer long-term investment companies as of now. Maybe they'll transform themselves and maybe there'll be an opportunity at some stage for them to become long-term opportunities. So, they just look trading plays at a time when they get heavily oversold, you can buy them and hope to make 12 to 15% kind of returns.

[00:00:54]Accenture, >> [clears throat] >> the read through is more about them thinking that the overall economic outlook might not be as strong and because of that they will not grow as well as what the expectations were rather than threat from AI et cetera. So, I think to that extent a lot of these concerns are already built into the stock prices of these IT services companies.

[00:01:25]Now, on the flip [snorts] side if we have to play the devil's advocate, what we can say is that the advancements in AI are so rapid, like the new models are coming up so fast that the disruption will only grow going forward. So, I think it depends on which side you are.

[00:01:45]From our perspective, we are not looking at IT as a as a like the Indian IT company as a business where we are looking to invest in any significant way.

[00:02:01]>> Sandeep, from from the IT thing, do you think there is a the sell-off which we have which happened last night is a little overdone because we are you know, Accenture is down nearly 18%.

[00:02:17]Cognizant down 10%. Infi hit badly as well and Wipro.

[00:02:22]Do you think the top-line growth for Indian companies or how we look at it and how Accenture is trying to portray there is a there is a disconnect there?

[00:02:36]>> There's no disconnect per se because most of the IT companies have guided for subdued growth except for some of the mid-cap ones which have actually guided much higher.

[00:02:47]So, now how those companies fare is something we need to see. So, I think as far as absolute price levels go, there could be bigger risk in some of the mid-cap companies rather than large-cap IT companies from the current levels.

[00:03:02]But, like I said, like it's not a business or industry segment where investors should be looking invest disproportionately.

[00:03:15]>> Interesting.

[00:03:17]Just looking at some of the you know, more buoyant segments in the market and definitely, you know, you are seeing some of those oil sensitive spring back quite a fair bit. InterGlobe Aviation is one such name we've been tracking. This renewed vigor and trend. I mean, the stock is I think moved up what? 10 to 12 what percent in just the last few trading sessions. Some of the Adani group of names have been doing very well. Renewed vigor for select PSU banks as well. SBI was in a leadership position just yesterday. And then of course, defense as a pack has been holding up very well. And I'll come to other individual movers like a Nykaa etc. as well too.

[00:03:55]But Kunal, the two big movers from yesterday, Max Healthcare and then Trend which has been holding up so well off late.

[00:04:03]>> Yeah, I think you know, so Max Healthcare for example was a bit of a surprise because you know, the stock was still going through a very steady recovery. It's still off from its May highs around 1,000 1,100 1,120 mark for Max Healthcare. But then the move which yesterday we saw for the the stock price up 5 6% for Max Healthcare was on the back of some exceptional volumes. The volumes which you have not you know, seen over the last I think 2 3 weeks for the stock price. So that probably indicates that maybe a new trend could be in the offing for the stock price. We might probably have to just wait for that one confirmation of a breakout of the previous highs around 1,110 1,120 mark for Max Healthcare. But I think once we see those signs emerging, then I believe it could be a good medium-term bet you know, for you know, so sort of investing with a time horizon of 6 months plus and expecting the stock to move towards 1,200 to 1,300 kind of a zone. Trend on the other hand I think is a different ballgame altogether because the stock has confirmed breakout on multiple time frames. You know, multiple series of patterns being formed. The stock has come back towards its 9-month or a 10-month high breaking past about the previous highs I think September October 2025. The manner in which the stock has confirmed a breakout about 200 being average. The volumes encompassing this move for Trend, I think all of that is extremely positive.

[00:05:20]My sense is that this could be a bigger scope of recovery for the stock in the near to medium term and something which the stock has not seen from those 2024 highs.

[00:05:29]>> And the other one of course, Nykaa after their you know, annual investor day 2026 which was held just yesterday. The company is now unveiling their FY30 vision outlining their ambition to become a $5 billion beauty and lifestyle business.

[00:05:47]And Sandeep clearly you know the markets like what they heard. Look at the move on Nykaa.

[00:05:54]>> Nykaa as a company has been doing well.

[00:05:56]I think the way they have been able to grow their beauty vertical like at least and they are looking to grow other businesses also rapidly and the good part is that their profitability has continued to improve.

[00:06:13]So I think this is one like currently after the run up the valuations obviously look a bit on the higher side but is a stock which should be on the radar on corrections because I think uh their strategy the way they are growing and the way they are going while uh improving profitability trends is a positive sign.

[00:06:40]>> How do you uh you know look at the commentary coming from many companies?

[00:06:44]Now everyone is trying to put in a uh you know a long-term growth curve for for the companies five-year uh is that does that does that also give you an indication that in the short-term maybe a year or two there is so much of uncertainty that there's no guidance that can be given but over a five-year period you can give a path to growth.

[00:07:08]>> I don't really think so. I think if companies work with a five-year uh goal post that's always better than them trying to work on a quarterly basis. So I think many companies are doing this and these tend to be goals. So some of for some companies they'll be achieved for some companies they will not be achieved.

[00:07:30]So we need to analyze ourselves as to which are the companies which will be able to either achieve not achieve or maybe over achieve these targets. So I think it's good that the companies many more companies are working with a more longer term horizon.

[00:07:47]>> Okay. Many companies out there though have come about and talked about the FY30 targets. But we'll take a very quick break on that note. When we come back, we'll chat about all the other buzzers and newsmakers in trade.

[00:08:14]For the market right here on ET Now, where the Gift Nifty is staring downwards of about almost 188 points.

[00:08:19]We've done comfortably okay from the start of the week up until now. In fact, yesterday after leaving it off almost nudging the 24,200 print for the Nifty futures, a little bit of a sideways session is a definitely something that the market can digest. But talk about the broader market strength and that's where you're seeing some very, very lively action of late. Look at Bata for instance yesterday. Of course, it was a very news-specific trigger.

[00:08:46]Uh what the markets did like was the appointment of the new managing director and chief executive officer, Sandeep Rao. And the stock rallied almost about almost 20 odd percent. And remember, he's been someone who has [clears throat] been at the helm with companies like Nike retail, with Inditex, uh the parent of Zara uh globally, and Guess as well are some of the brands that he's worked with. And the street is uh street is really anticipating a big turnaround with him coming in as the MD and CEO. The entire sneakerization strategy that Bata has so closely been following, uh they believe, or rather the street is at least hoping, that he will be able to accelerate that.

[00:09:26]And over the past 3 years, we've seen that, you know, Bata has been somewhat of an underperformer.

[00:09:32]Um the revenue growth stagnated at about almost just 1% of a CAGR. and the net profit as well has declined about almost 20%. So, let's see, fingers crossed over there. Having said that, Sandeep, what do you make of this uh you know, new management change at Bata and whether or not a brand like Bata can perhaps be poised for a turnaround?

[00:09:57]>> It can be because it's got significant resonance in the middle class segment as a brand. It's lost its way under the current leadership over the last many years where the management, like I've attended so many conference calls or under the current CEO also, where they have guided for very aggressive growth turnaround, etc., but they have not been able to do it.

[00:10:23]And maybe it's due to their poor retail strategy, product strategy, not able to compete with the new generation of D2C brands.

[00:10:37]But, I think the change was much required.

[00:10:41]How fast a new CEO and I think the CEO matters in many companies. So, how fast a potential turnaround can be brought about is something to be seen. I think the incipient signs of a turnaround in consumer demand is already there.

[00:10:57]So, if they can capture on it and grow faster, then this stock, which is now trading at multi-year lows, would potentially do better.

[00:11:08]>> Uh Sandeep, just switching focus to EMS.

[00:11:11]You know, that's that's one of the other sectors which has been buzzing at least through the week uh this week. Give us a sense. Dixon, Amber, Amber has in fact announced a tie-up and and with Oppo for manufacturing in India and they'll be manufacturing Oppo, OnePlus, Realme uh in India. This could obviously strengthen the mobile business for Amber. But, give us a sense as to how you're looking at the sector and more importantly the valuations, because that seems to be the crucial concern uh with regard to the sector.

[00:11:46]>> The valuation of this sector is very high given the fact that they operate in a business which is low value addition and low margin business.

[00:11:58]I don't think the price and ratios which are described to these companies uh I don't think they deserve that. I think the valuation should if you ask me, should not be more than 25 to 30% of the valuation that it used to trade. So, so I I'm not looking at investing in any company in the segment.

[00:12:18]>> Uh Sandeep, any any fresh ideas that you're looking at at this point of time?

[00:12:22]Obviously, markets at 24K, so no longer as cheap as we were in March, maybe at 22K, but substantial more certainty, uh crude cooled off quite sharply. Any uh tactical ideas? Any on-ground ideas that you're looking at more from a medium to long-term perspective?

[00:12:42]>> I think as far as sector goes, I think uh auto as a sector has been underperforming near term despite the kind of uh fall we've seen in crude oil prices, etc. and some moderation commodity prices also.

[00:12:57]As on-ground trends of demand still remains strong despite uh concerns of the monsoon.

[00:13:05]So, I think this could be one sector along with the auto ancillaries uh which could uh potentially be a sector to look at.

[00:13:15]Other than that, I think there are various companies which individually are doing well. So, I think those are the ones we keep on analyzing.

[00:13:24]>> Okay, just looking at some of the