HCL Tech top bet from IT space: Rahul Arora

Rahul Arora, CEO at Nirmal Bang Institutional Equities told CNBC-TV18, "We are largely neutral to underweight on the IT sector. Infosys for us was a forced upgrade because of the 4.5 percent quarter-on-quarter (Q-o-Q) growth. We don’t think that the dynamics have changed, so our report that came out earlier this year talked about digitization being a big risk to revenue growth going forward because when you are talking about digitization, you are basically talking about the contract sizes that you bid for going down while holding your margins which essentially means that that 12-14 percent Nasscom growth rate that you are talking about will not come."

"If you look at something like HCL Technologies, digital is something that they have been doing so long in the infrastructure management services (IMS) space and which is why if you see the IMS revenues of HCL Tech, they have been doing phenomenally well over a period of time. It is unfortunate that it has got that kind of discount to the large cap peers for various reasons but that would probably be on a relative basis our top pick in the IT sector," he said.

"Infosys is a forced upgrade because the numbers were really strong, so we have upgraded our price target by as much as 25-30 percent and we have taken it from a sell to an accumulate."

"Tata Consultancy Services (TCS) will probably be the biggest disappointment in the IT sector, they will be lucky to do 10 percent growth this year. Wipro at best is a neutral call that we have and in Tech Mahindra we had a sell call. It has worked out well for us but I don’t think there is too much incremental downside from here. So, that is probably the way will rank the IT stocks at this point," he said.