Midcap IT stocks could see good bounces

CNBC-TV18’s Executive Editor, Udayan Mukherjee - We saw quite a bit of bounce in the midcap IT space yesterday. Average rise in the stocks were 9-10%, so some of it has happened but there is so much value in the sector. If one is looking at multiples, most of these midcap IT companies are trading between 5-10 P/E multiple. NIIT and Subex is at 5 P/E multiple, Hexaware is 6 P/E multiple, Mastek at 7 P/E, Polaris at 8 P/E, KPIT at 9 P/E, so between 5-10 P/E one will find almost all the midcap IT companies trading.
 
With regards to midcap IT, if there is couple of more interesting numbers like Mastek came in with yesterday and if Infosys doesn’t disappoint terribly with its guidance and just about holds that EPS of Rs 90-92 band which is not too good, not too bad then one could see big percentage rise in midcap IT companies. Because if 7 P/E goes to 9 P/E then one is seeing a 30% jump in price, so one could potentially see if the turf is good 20-25% kind of bounce, which is very good for many of these midcap IT companies. 
 
I sense there could be an opportunity here if Infosys does not disappoint. The only caveat here is that one needs to be careful about what they disclose in terms of derivative losses and forex. Hexaware came out with a howler a while back and these companies do so many forex dealings that some of these midcaps run that risk. But otherwise terrific value in terms of P/E multiples and one could see good bounces.