Indian IT cos could gain from woes of Atos, Temanos, says Nilesh Shah

Nilesh Shah, managing director of Kotak Mahindra AMC

Two big global information technology (IT) companies staring at bankruptcy could bring more business to Indian IT companies, said Nilesh Shah, managing director of Kotak Mahindra Asset Management, at the PMS AIF WORLD's fifth annual summit on February 23.

Highly indebted French company Atos is on the verge of collapse with its share price diving almost 60 percent in the last six months. Another company, Temanos, is on the same path after Hindenburg Research a week back pulled up the company for roundtripped revenue, sham partnerships, rampant pulling forward of contract renewals, backdated contracts, excessive capitalization of seemingly non-existent R&D investments, and other classic accounting red flags.

Shah said that Atos is probably going into bankruptcy and clients will shift its business from Atos to other IT companies. A large part of this business will come towards Indian IT companies, said Shah.

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"Temanos, a company which provides core banking solutions, is also going into bankruptcy. It is very likely that some of Temanos' business will come to the two top core banking Indian companies," said Shah. He further said that it is very likely that people will allocate business to Indian IT companies with strong their balance sheets and a track record of execution.

PMS AIF WORLD is an alternates focused investment and wealth platform for high net-worth individuals and non-resident Indians.

Even though the technology sector won't give returns in the next three-to-six months, there is enough opportunity in the sector and investors should accumulate these stocks and build their portfolio in the meantime, said Shah.

Shah said that Indian IT companies have transited from infrastructure management, code writing, application maintenance to cyber security and store cloud computing. He said that in the same way, these companies will also transit to using artificial intelligence (AI) in order to provide better solutions. They will reinvent themselves and use AI to deliver cheaper and faster solutions to their customers, Shah added.

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