See scope for upward re-rating in Infy, TCS: Aberdeen AMC

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Valuations stretched but mkt may chug on further: Experts ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

Q: You mentioned Infosys. From what you saw in earnings though do you see a case for some of these technology companies to get rerated?

 A: I think selectively you would see some strong performances. Tata Consultancy Services, which is another stock that we do hold, has produced some good numbers this quarter as compared to what they have been going through over the last year and a half. So, I think there are signs that the sector as a whole is coming out of a relatively tough time. Its also interesting to look at the mix, there seems to be signs that most of their client base is extending the portion of the outsourcing offshore, so outside Europe, outside America and that plays into Indian outsourcing story very firmly, so we think that things are looking good for the IT sector regardless of what your views on the US dollar, rupee position should be.   

Q: Post the change in management and the kind of rough data that's been coming out from company, have you started relooking at Mahindra Satyam as well?

 A: We pay a close attention; I think we do need to have a look at how that stock runs over the next two-three quarters before we make a play into the stock. We tend not to trade, so we won't move in and out of technical positions like what some of the other players might be doing with Mahindra Satyam at this point in time. I think there are still pieces in Satyam that are good quality, good value but at this point in time with a certainty that we have we rather have Infosys and TCS which gives us greater visibility and continuity.  

Q: How have you been approaching the spat of qualified institutional placement (QIP) and initial public offering (IPO) which have been floated by Indian companies? Have you been tempted or does it concern you, have you bought into any of those real estate or infrastructure QIPs?

 A: We have done homework; some of the ideas conceptually look tempting. It's a market that we have carefully stayed out of currently though. We continue to visit quite a lot of these companies. But I think looking at the valuations that you currently have to pay up; we would be on the sidelines. I think the market is deep enough; there is a lot of liquidity and enthusiasm for these issues is just a game that we don't currently play perhaps our style is too conservative but it has served us well over the long-term and this is something that probably sit on the sidelines for now.     

Q:  Have you studied the valuations for the large IPO which is opening today - Adani Power?

A: Yes we had a look at that.

Q: And you are passing?

A: At this point in time yes.

Q: You don't like the valuations of the power space either or do you think it's just an oversold story?

A: I think it's an interesting story, I think its one that has a lot of potential but given the state of where the markets are at, given the strength of earnings per share growth that we have seen across many sectors, I would be more enthusiastic for stocks like Infosys and HDFC even HDFC Bank than some of these issues that have come out - not just Adani Power but some of the other issues as well.

Q: A word on Reliance. Last I checked, you were not terribly overweight on that in your portfolio. Has that changed or you remain underweight, relatively speaking?

A: We do not hold any Reliance Industries.